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.”
Recommended for you
Platinum Asset Management has put its two closed-end funds under strategic review in a bid to reduce the share price discount to pre-tax NTA and maximise shareholder value.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.