InvestmentsDec 13 2013

Old Mutual: Clean pricing brings active closer to passive

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Old Mutual Global Investors chief executive Julian Ide has claimed fees for passive and active management fees are no longer as different from each other as is often argued.

He said: “In a post-RDR world active management is not that different from passive in terms of price now and you get a performance premium.”

Speaking at a 2014 outlook event earlier this week, Mr Ide - whose group provides solely active management strategies - also argued that the ‘active versus passive’ debate was often “misleading” as many trackers underperform consistently, a charge regularly levelled at active managers.

The chief executive expanded further on the topic in an article penned for OMGI’s 2014 outlook release, highlighting the multi-manager team’s access to institutional rates as an example of charges that are “competitive” with passive fees.

“It is my view that in the new world of transparency and clean pricing it will be increasingly difficult for passive funds to sell themselves on cost,” Mr Ide wrote.

“There is nothing wrong with passive investment. Where it is done properly and for the right purpose it supports strong, focused active management. We accept that in charging a premium for active management we need to deliver commensurate performance. That is what we are here to do.”