An argument for active investing

THE move from active to passive investing has been nothing less than seismic for the asset management industry. In the past 10 years, passive equity has gone from around a tenth of total equity assets to over a quarter, and the momentum in this growth seems inexorable.

We believe there are many good reasons to invest in passively managed funds. But while we find the reasons for the shift compelling, we offer three thoughts as to why we think this might not be the time to accelerate the move.

If you'd had perfect foresight in March 2009 with the S&P at a low of 667, you would have gone 100 per cent long an equity ETF (exchange-traded fund) and be done with it - and you would have been absolutely right.