Active management worth the cost
Lonsec has defended the cost of active management fees at its annual roadshow in Melbourne.
Speaking to an audience of financial planners at the roadshow, Lonsec head of investment consulting Amanda Gillespie said that investment management fees gave active funds the resources to be able to uncover unique investment opportunities that passive funds wouldn’t have access to.
While costs could go up to more than 100 basis points, the monthly return in excess of the market was the highest for active funds, Gillespie said.
“The net outcome after costs for an investor is typically superior using a higher cost active approach,” she said.
Gillespie said it would surprise planners to learn that the investment management fee was only a third of the cost incurred to use a platform to access a managed fund.
She added that criticisms that using an active manager just gave you a ‘glorified index outcome’ were only valid if planners chose the wrong manager.
Investors needed to pay more if they wanted access to greater upside potential, Gillespie said.
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