Looking at index tracking and active investment
Index tracking and active investment each has its place. Take a good look at both
Once a year, fund managers get to see how they have measured up against what the market returned over the previous 12 months. This exercise is not much different from a school report card in which you see how you scored compared with your classmates. However, the stakes for fund managers are much higher. They’re not lining up in front of the headmaster or teacher, but in front of a far more discerning bunch: the investors whose money they’re tasked with protecting and growing.
While results always differ according to what has happened in markets, economies and industry sectors, there is an emerging trend that is less than flattering for active investment managers. According to the annual S&P Indices Versus Active (Spiva) scorecard, the vast majority of active fund managers have produced lower returns than their respective benchmark indices. The scorecard for SA managers in the year to the end of 2016 continues this tendency...
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