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One of the world’s largest passive investment providers has published a guide to help investors navigate the active-versus-passive investment debate. Vanguard – the US-based passive manager that started the first index-tracking or passively managed fund and now has $5-trillion (R59-trillion) under management – says it rejects the idea that active versus passive is a binary choice, as both strategies have potential benefits. Active fund managers believe they can select the best shares or bonds to outperform the market as measured by an index like the JSE all-share. They charge for their services, but promise to deliver returns worth more than their fees. Managers of index-tracking unit trusts and exchange-traded funds simply invest in the same shares as the index they are tracking, and can do so at a low cost. They argue this low-cost way of investing will get you a good market-linked return and that the cost saving is certain, while the promise to deliver market-beating performance ...

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