The active/passive debate surrounding the effectiveness of both investment styles continues to be contentious and has our panel split down the middle.
A report last month by Uppsala University in Sweden found actively managed Swedish funds fail to live up to expectations and are outperformed by passive index funds The study shows that in periods where the overall stock market rose the actively-managed funds struggled, with barely a third of the funds beating the index. They performed better in periods when the stock market was falling, with four out of five such funds outperforming the index. However, over a 15 year period, only two of the 36 funds included in the survey outperformed their benchmarks.
But asked if their active domestic equity managers beat their respective benchmarks over the past 15 years, half our panel said yes, and half said no.
One US scheme manager said: “We terminated all of our long-only US equity managers and replaced them with passive exposures. If dispersion is expected to increase, dispersion options may be added to replicate active managers at a lower cost.”
The US manager was not alone with one other respondent saying 80% of their assets are managed passively, and a number of others saying they’ve increased their use of passive management.
One scheme manager said: “We use more passive management due to our disappointment with active management.”
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.