Active beats passive in intermediary portfolios

Active beats passive in intermediary portfolios

Advisers have been leaning towards actively managed funds with a strong bias towards income within investment portfolios rather than passive funds.

Carlo Trabattoni, head of Schroder Investment Management’s pan-european intermediary and global financial institutions group, said: “One of the main questions that the survey raises is how to address the disconnect between end investors’ risk appetite and investment timeframe, and their expected returns.”

According to the firm’s recent survey of advisers around the world, among the 110 discretionary fund managers and fund selectors at its Investment Conference in Budapest recently, 58 per cent of advisers held less than 10 per cent of passive funds in their clients’ portfolios.

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Mr Trabattoni said this confirmed the impression given in the firm’s March 2015 global investment trends survey of 2,000 intermediaries around the world.

It showed equity funds were the most popular investment vehicles, with 52 per cent of respondents preferring to recommend active funds over other instruments, such as direct stocks and ETFs.

Adviser view:

Steven Rowe, director of Solihull-based IFA Lucent Financial Planning, said: “Passive investors claim that their strategies work all the time. So when the market falls they say it will come back again – but they can’t always be really sure that it will.

“For active investors the problem is when to buy back into the market. It is probably best to leave it where it is. With investing it is like baking a cake – if you want it to rise leave it in the oven.”