Passive investment can be hazardous
A passive approach to investments could be hazardous as the indices ignore many factors such as foreign and fiscal policy, according to Ariel Investments.
The company’s chief investment officer, international and global equities, Rupal J. Bhansali stressed that active investing tended to “do better in choppy markets.”
She also said that Trump’s agenda included a few factors which were being ignored by the indices, presenting greater risks for passive investors and greater opportunities for high conviction active managers.
“I think passive has become a very crowded trade of late,” she said.
“Chasing what is in vogue has never been a successful recipe for securing long-term returns but instead often proves to be a precursor to large losses or underperformance.
“Passive investors may find they have been penny wise and pound foolish by unduly focusing on low costs at the expense of higher risks.”
AUTHOR
Oksana Patron
Recommended for you
BlackRock Australia plans to launch a Bitcoin ETF later this month, wrapping the firm’s US-listed version which is US$85 billion in size.
Financial advisers have expressed concern about the impact including private market exposure is having on their tracking error budget, according to MSCI.
State Street will restrict its membership of global climate alliance Net Zero Asset Managers after the organisation dropped its flagship 2050 goals amid ESG backlash from the US.
Betashares has launched a global shares and a global infrastructure ETF as part of the firm’s strategic expansion strategy to support financial advisers in building more diversified portfolios.
