One particularly notable aspect of what has transpired is a new slant on the perpetual active versus passive investment battle.
According to analysis by Hargreaves Lansdown, the ‘stormy August’ saw UK trackers among the worst performing funds in the industry.
“The bottom of the table in the UK All Companies sector illustrates how much worse tracker funds have done compared to active funds in the recent sell off,” said senior analyst Laith Khalaf. “Eight of the ten worst performing funds in the sector were tracker funds.”
“The reason is that tracker funds are obliged to hold large positions in the oil and gas and mining companies which make up around a fifth of the FTSE 100 index, whereas active funds have been able to avoid these areas,” he added.
Yet, data released today by The Share Centre indicates passive funds have rarely been more popular. An ‘unprecedented’ four of the top ten most traded funds during the month were trackers, with offerings from L&G, HSBC, Vanguard and Blackrock making the list.
The question this raises is what more can active managers collectively do to gain a greater slice of the market, or even simply hold onto what they have now?
Active managers and their firms are being hit from all sides recently. Contending with particularly choppy markets, the resulting negative sentiment and the cranking up of fear levels is not the whole story.
