Active investing: is it a gamble?
Or do passive funds merely guarantee average returns?
If ever there was a time to give serious consideration to the "active versus passive investing" debate, that time is now. In a low-return environment you can't afford to be blase about the impact of fees on your investments. More than 90% of South Africa's unit trusts are actively managed, yet on a global level actively managed investment funds are losing popularity, with millions of assets under management flowing into low-cost index-tracking (or passively managed) funds. When investment heavyweights Steven Nathan and Neville Chester came to blows - figuratively speaking - in a live debate in Cape Town last week, the question of fees was one of the key issues. Nathan, a champion of passive investing and the CEO of 10X Investments, took a swipe at active managers for charging "excessive" fees. Hitting back, Chester, who is a senior fund manager at Coronation Fund Managers, said asset management fees were justified by outperformance. Chester's claim led to two key questions: do activ...
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