The active versus passive debate is clearly one of the most polarising arguments in the investment industry today (Index tracking not as attractive locally as US numbers suggest, August 14). But at Ashburton Investments, we do not believe it should be an argument at all. To us, passive investing has been a positive development for the industry. There are thousands of easily replicated indices and benchmarks in existence today across many asset classes and it is only right for investors to have an option to track these markets at a low cost. Passive does have a role in investment markets, but what explains its stratospheric expansion in popularity over the past decade? The answer lies in the economic environment we have witnessed over this period. In the wake of the global financial crisis, many major economies undertook largely co-ordinated efforts to expand balance sheets and provide almost infinite liquidity to the system. The by-product of quantitative easing, combined with ultra...
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