The preference is for tracker funds, rather than ETFs, with Metcalfe stressing cost came first in choosing the right funds.
“Fund houses try and show what they see as a value add because they have a super low tracking error, but really it is the asset class itself that is going to decide the performance, not the tracking error to the second decimal place.”
He added that the funds are unlikely to push beyond 30% in passives: “It’s all a trade off. Active managers can destroy value like they can add it, but if we went any further than 70/30 then I think we would potentially compromise performance, certainly in current conditions.”
