Passive investment can be hazardous
A passive approach to investments could be hazardous as the indices ignore many factors such as foreign and fiscal policy, according to Ariel Investments.
The company’s chief investment officer, international and global equities, Rupal J. Bhansali stressed that active investing tended to “do better in choppy markets.”
She also said that Trump’s agenda included a few factors which were being ignored by the indices, presenting greater risks for passive investors and greater opportunities for high conviction active managers.
“I think passive has become a very crowded trade of late,” she said.
“Chasing what is in vogue has never been a successful recipe for securing long-term returns but instead often proves to be a precursor to large losses or underperformance.
“Passive investors may find they have been penny wise and pound foolish by unduly focusing on low costs at the expense of higher risks.”
Recommended for you
Funds managers are being urged by financial advisers to improve their “outdated” education and communication about alternative funds as they actively target them towards retail clients.
GAM Investments has appointed Eric Finnell as its managing director for Australia after his predecessor left to take up the CEO role at Global X.
Fidelity International has looked internally to appoint a head of strategic sales and solutions for its Australian division, which is a newly created role for the business.
Lonsec’s deputy CIO Deanne Baker has highlighted what investment tools the firm is harnessing to mitigate the impact of geopolitical risks in its managed account offerings.