Passive vs active they ’ re very bad at predicting when the market is about to fall . Nor do they tell you that by reducing their risk exposure in anticipation of a crash that never comes , they tend to lose out to index funds when markets suddenly rise , too . Again , it comes down to averages . No active manager likes to admit being below average , but half of them have to be .
● The investment community is divided into active and passive investors
● Before fees , the return on the average actively managed pound of shares in “ Company ABC ” will be the same as the return on the average passively managed pound in the same firm
● Active managers need salaries , support teams , research resources and marketing budgets , so they
Performance of sector vs index over 10 years
MSCI World ( 237.2 %) IA Global ( 180.0 %)
300 % |
|
|
|
|
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250 % |
|
|
|
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200 % |
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150 % |
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100 % |
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50 % |
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0 % |
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-50 % |
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Sep12 |
Sep13 |
Sep14 |
Sep15 |
Sep16
Sep17
Source : FE Analytics
Sep18
|
Sep19 |
Sep20 |
Sep21 |
Issue 87 - September 2022 / 9 /