Debating the value of 'active management'

IT

As interest in equity investment is revived, Lucy MacDonald, co-manager of the Brunner investment trust, reveals how to assess when active management is boosting portfolios.

During the last 30 years, the inexorable rise of passive, quasi-passive, and closet-index investing has been witnessed. However, a renewed interest in equities in recent months has reignited the debate about the benefits of ‘active management’. Truly active managers account for a diminishing percentage of total fund assets. This trend has continued after the global financial crisis, due to risk aversion and preference for minimal volatility of returns. On the whole, retail investors would appear to prefer the certainty of the slight post-fee underperformance that passive investments d...