Many investors may have faith in passively managed funds, but the experts don’t share their positivity.
That’s the verdict of new data from Fidelity which shows that professional money managers don’t have the same faith in passives as most mainstream investors.
Whereas industry estimates from the likes of Lipper and Morningstar show that the push to passives has continued early in 2016, a Financial Times
list of brokerage-based advisors shows that active managers are favoured ahead of passive strategies on a scale of four-one. It seems that the elite services are still putting client assets into active funds.
In addition, Fidelity is launching a study to examine the argument that with more volatile markets come attractive opportunities if you have an active strategy. According to a preview of the report, an actively managed fund typically outperforms index linked rivals by 0.7 per cent.
Of course Fidelity may not be seen as a completely objective commentator given that it is a distributor of active managed funds. However, there appears to be a growing consensus among financial advisors that now may be the opportune time to look at low-cost active management with the stock markets proving increasingly choppy and expectations slipping.
According to Jeff DeMaso, the director of Adviser Investments, the idea that you can’t find active managers outperforming benchmarks “is a myth”. He believes seeking the best in active fund managers offers added value for clients.