ASSET MANAGEMENT
Passive investment only ‘is risky’
As underperforming active asset managers fall out of favour with SA investors, Mark Lindhiem, chief investment officer at Investment Solutions, part of the Alexander Forbes Group, has cautioned against using only passive investments. "We embrace low-cost passives as part of an investment strategy, but [investing only in passives], thinking they will do well because of past performance, is a high-risk strategy," Lindhiem said on Monday. While statistics showed that most active asset managers did not beat the benchmark, good-quality active managers should form part of an investment strategy alongside cost-effective passives, he said. The latest S&P Indices Versus Active scorecard for SA shows that 86% of actively managed equity funds failed to beat their relevant benchmark over the five years to June 30 2016. Arguably, traditional passive strategies, which generally track an index such as the JSE all-share index (Alsi) or Top 40, have not been tested by a major market correction over ...
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