UK - A passive management style outperforms around 60% of active managers, a new report by consultants PricewaterhouseCoopers claims.
The financial services giant said active management was a “negative sum game” and it was easier and more reliable to choose a passive manager.
PwC partner and author of the report, John Shuttleworth, said: “As a matter of history passive managers meet the vast majority of active managers and this can be expected to continue.
“The problem active managers have is the significant and substantial costs. They have to perform just to recover these costs and it is a difficult balancing act.”
Shuttleworth highlighted the performance of a tracker from Legal & General, which outperformed a selection of active mixed equity and bond pooled funds after risk adjustment.
The report said passive management was low in price and risk, and decisions took up less of trustees’ time.
It said active management is unattractive because of the risk of below average performance, enduring cyclical performance and having to replace the active manager occasionally.
The report added that attempting to identify the 40% of managers who statistically outperform passive managers was very difficult.
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.