Investors ignore quality and returns in rush for cheap funds
Biased commentators ignore fact that index trackers always underperform their benchmark, writes Christo Geyer
Coverage of the investment management industry over the past few months has been characterised by persistent and often excruciating arguments about the level of fees. "Tracker funds are the future!" scream taglines; "Passive is the only way!" bellow index trackers. The din is such that a casual observer may conclude the argument is over and zero fees the only end-point. While fees paid to the manager obviously reduce the investment return earned, this myopic focus on the absolute level of fees distracts, like a magician’s skilled hands, from the real trick: after-fee returns received by the client. This distraction is in many cases no accident. With the exception of a few respected, unfettered financial journalists, many commentators have skin in the game and unashamedly grab media exposure to advance their own passive asset management businesses. At Prudential Investment Managers we are unabashedly active in our approach to investing and committed to adding investment value for our...
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