Active managers better at managing downside

30 November 2018
| By Oksana Patron |
image
image
expand image

Active managers are better at limiting downside at times when markets go down than passive investors, according to boutique small cap manager, Prime Value Asset Management.

According to the firm, the ability to avoid the big losers was equally as important as picking big winners when it came to selecting stocks.

“It’s seductive to put too much focus on selecting big winners, but avoiding poor performers is often more influential on returns,” Prime Value’s portfolio manager, Richard Ivers, said.

“It’s that old rule – if you lose 50 per cent of your capital, you need a 100 per cent return just to get back to where you were.”

Ivers stressed that passive strategies looked good at times when markets were stable and rising, but they were often exposed during corrections with a long-lasting impact on performance.

The small/micro cap Prime Value Emerging Opportunities Fund outperformed the Emerging Companies Accumulation Index by 20 per cent since joining Prime Value six months ago.

Since inception in October 2015, the fund has returned 11.3 per cent per annum, the company said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 1 week ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 1 week ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 5 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

18 hours ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 3 days ago