Passive investment can be hazardous

Ariel-Investments/passive-investing/indexes/

27 February 2017
| By Oksana Patron |
image
image
expand image

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.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

1 month 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

2 weeks 6 days ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 5 days ago

TOP PERFORMING FUNDS