Page 13 - DIY Investor Magazine - May 2019
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         They are also exposed to less active risk (the risk associated with not performing in line with the index), however, they do remain exposed to the same overall risks as the market.
In general, passive funds are more readily understood by investors who know what they are going to get and can judge the progress of their investment more easily. This means lighter touch monitoring and maintenance is required.
Square Mile has recently conducted some analysis on whether active funds in general have outperformed or underperformed their passive counterparts for several different sectors. As you can see from the chart below, over rolling three year periods the average active UK equity fund has outperformed the average passive fund which tracks the FTSE All Share, while the average active UK equity fund was even able to outperform its benchmark.
We have also discovered that in the Sterling Corporate Bond, North American and Sterling UK Gilt Sectors on average passive funds have outperformed active funds while in the Global and UK All Companies sector active funds have outperformed passive funds.
This reaffirms our belief that the decision to go active or passive is not binary. For most investors, the choice is usually not one or the other, but a bit of both.
Source: FE Analytics
View the full active & passive report by visiting
Important Information
This article is for the use of professional advisers and other regulated
firms only. It is published by, and remains the copyright of, Square Mile Investment Consulting and Research Ltd (“SM”). SM makes no warranties or representations regarding the accuracy or completeness of the information contained herein. This information represents the views and forecasts of SM at the date of issue but may be subject to change without reference or notification to you. SM does not offer investment advice or make recommendations regarding investments and nothing in this presentation shall be deemed to constitute
financial or investment advice in any way and shall not constitute a regulated activity for the purposes of the Financial Services and Markets Act 2000.
This presentation shall not constitute or be deemed to constitute an invitation or inducement to any person to engage in investment activity. Should you undertake any investment activity based on information contained herein, you do so entirely at your own risk and SM shall have no liability whatsoever for any loss, damage, costs or expenses incurred or suffered by you as a result. SM does not accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance is not a guide to future returns.
For more information on unit trusts, OEICs and investment trusts see sister publication
Focus on Funds here
      13 DIY Investor Magazine | May 2019

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