Passive versus active: It needs no debateBY JOHN DYALL | THURSDAY, 10 AUG 2017 9:12AM Have we entered the post-truth world in discussing passive versus active investing? There has been a lot of talk recently about the rise of passive versus active in equities investing. Upgrade your subscription to access this article
Join the growing community of financial advisers
with unlimited access to our latest news, research and analysis of the industry.
Become a premium subscriber today. |
Latest News
Firms rebuffing AFCA determinations should be named: FAAA, professional bodies
|The Financial Advice Association Australia (FAAA) and four other professional bodies are urging the Australian Financial Complaints Authority (AFCA) to name and shame financial firms that fail to follow through on a determination as more than 60 have failed to do so.
Inheritance dissatisfaction an advice opportunity: Report
Most high-net-worth (HNW) inheritors are unhappy with how they have used their inherited capital, presenting an opportunity for financial advisers.
Link Wealth acquires boutique advice firm
Link Wealth's national expansion is continuing to progress, acquiring financial advice firm Xponential Advisory a few months after taking a majority stake in Sky Advisers.
AIOFP, FAAA encouraged by first meeting with Mulino
Following their inaugural meeting with new financial services minister Daniel Mulino, the Association of Independently Owned Financial Professionals (AIOFP) and Financial Advice Association Australia (FAAA) feel enthused about the impact he will have on the profession.
Further Reading
Cover Story
Moving mountains
MAGDELINE JACOVIDES
FOUNDER AND FINANCIAL ADVISER
MAZI WEALTH
FOUNDER AND FINANCIAL ADVISER
MAZI WEALTH
On top of running a successful practice, Mazi Wealth founder Deline Jacovides is a fierce advocate for closing the superannuation gender gap and has built a highly popular social media presence that takes financial literacy to the next level. She tells Karren Vergara where her passion comes from and how she integrates it all with family life.
Expert Feed
The need to achieve real scale in advice - and serve all Australians
One of the great social challenges in financial services today is the millions of everyday Australians who want and need financial guidance but cannot ...
Are US assets becoming less desirable?
There has been so much commentary, including by us, on the twists and turns of US trade policy - notwithstanding the latest 90-day truce with China - ...
Listed private equity: A strategic opportunity amid global market dislocation
The sharp escalation in global trade tensions in 2025 has injected a fresh layer of volatility into capital markets.
How to manage the rise of 'early' inheritances
For decades, financial advice around wealth transfers has largely focused on estate planning and the distribution of assets after death. However, a significant ...
Passive investment is perfect for advisers that don't know what they are doing. Our in-house blend of active managers has consistently performed better than the equivalent passive counterparts & for less risk on the same asset allocation.
Employed passive Business Develop Managers struggle to understand this because all of their research compares to the "average" active manager. Well there's enough rubbish investment funds out there that pull the average down. A fairly simple comparison is merely looking at the average returns for well rated funds. The moral of the story is don't be slack in your fund selection. Ensure you are with a well rated fund & for the public ensure you are with an adviser that can explain the differences in funds to you.
John, well balanced of both side's arguments and representations. My main beef with comparisons of the two is that it assumes one can (and does) invest in an entire universe of active managers. This seems absurd to me as we cannot do so. Its result is meaningless for investors making an informed appraisal.
It also infers advisers and researchers have no means of value-adding in sorting out the entire universe...which seems an unlikely assumption (though not proven) as well.
Second it should remove active managers that are 'index huggers' at an active price. Say an R2 score over 80 longer term?
Third, yes weightings should be applied if doing like for like, but even then the flaw of point one renders it all useless anyway.
Its interesting to view the performance of active managers that gain the bulk of inflows only against the index over 3 and 5 year rolling periods - of say international Australian domiciled funds since 2000.