Simon Ellis, managing director at Legal & General Investments, explains why investors are wrong to view index funds purely as capital growth plays.
The shift towards passive management is one we have seen over a number of years in institutional markets. This trend is now being played out in the retail investment market, and the pace of change should accelerate with the arrival of the Retail Distribution Review (RDR) in 2013. One of the anticipated impacts of the RDR is a pressure on intermediaries to reduce portfolio costs, and this is expected to result in a greater use of low-cost passive funds within client portfolios. In a low growth environment, charges become increasingly important and can have a significant impact on inve...
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