The markets are inefficient and an active approach to investing may offer rewards for investors both in terms of risk and return, Campbell Fleming has said.
In response to the government consultation on collaboration and cost savings for the local government pensions scheme, the chief executive of Threadneedle Investments said: “The majority of the options proposed will not achieve best value for taxpayers, scheme members and employers, and in fact carry significant risk”.
He warned of the risks associated with compelling local authority funds into a large-scale move to passive investment.
Mr Fleming said: “We understand the government’s need to achieve savings through reform of the LGPS, and agree there is a place for consideration of passive management.”
Revealing that its active management outperformed by £45m to UK local authority clients, Threadneedle has called for the active versus passive debate to shift from cost to value.
Mr Fleming added: “Our track record for local authority clients demonstrates that active managers can, and do, deliver value to investors.”
Jason Butler, senior partner at London-based Bloomsbury Private Wealth, said: “There are two distinctions here - at stock selection level and asset allocation level, is there a way to add value with active management?
“It is an interesting debate and it would be good to see some empirical evidence, but the market price is the market price and, until there is more evidence, using passive is the least worst of a bad set of options.”
