There is also the ongoing passive fund price war. While passive funds have always by their nature been significantly cheaper than active strategies, this has been kicked up a gear over recent months. The likes of Blackrock have slashed tracker fees in an attempt to beat their rival passive providers, but the price cuts also make them more attractive versus active offerings.
The recent plummet across the board for shares also threw up a new argument in favour of wealth managers choosing passive over active. As reported here, Vestra Wealth CIO Jonathan Marriott has been using trackers to quickly and cheaply add a broad exposure when time is of the essence, and ‘finesses the detail’ of the position later.
It is well documented that investors access US equities at the higher end of the cap scale almost entirely through passive funds, with active managers not being able to beat the index in any meaningful way.
So far at least, active UK fund managers can in many cases still outperform the index, yet there are some signs that this is increasingly not enough for many investors.
In many things, where America goes the UK goes too, and this could be the case in the active versus passive battle sooner than most think, albeit for different reasons.
