The few bob question: Active or passive?

If you have already invested for clients in an emerging markets fund, but now think a few bob in a US equities portfolio will do better this year, then stop.

You may be set on placing the US bet – and you are not alone in the view – but the next question is: a few bob which way? At the Derby – be it Epsom, Kentucky or Hong Kong – it is ‘win or place?’ When making investments, it is ‘active or passive?’ Conventional wisdom says in more efficient asset classes such as US large caps, for example, the probability for an active fund to outperform is quite low – so go passive. It is cheaper, more liquid and you know where you will end up, relative to its benchmark. In general, too many rivals pounce on developed market information, pore over ...