Passive-only fund of funds outperform active counterparts - Morningstar

Fees play a big part

David Brenchley
clock
Fund of funds come out better on a risk-adjusted basis
Image:

Fund of funds come out better on a risk-adjusted basis

Fund of fund strategies investing only in index or smart-beta instruments have performed better than those investing only, or mainly, in active funds over the past five years, research from Morningstar shows.

In absolute terms, across six different investment categories, where there were passive-only fund of funds, Morningstar's data showed the passive-only option outperformed their counterparts investing in a blend of styles or active only each time. In Morningstar's GBP Moderate Allocation category, for instance, fund of funds investing only in index or smart beta funds returned just over 4% in annualised terms over five years. For those investing in a blended strategy or in active only, that return was under 3%. 'Draconian' FCA open-ended property fund measures expected to drive flow...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Funds

The ETFs aim to overcome traditional yield shortfall by using multi-factor investing.

Invesco launches two ESG credit ETFs

Invesco has launched two new ESG ETFs that provide investors with access to investment grade fixed-rate euro-denominated unsecured corporate bonds from global issuers.

clock 29 June 2022 • 2 min read
The ETF will be available to investors on London Stock Exchange for a total expense ratio of 0.35%.

Franklin Templeton launches Catholic EM sovereign debt ETF

Article 8 ETF for European investors

clock 28 June 2022 • 1 min read
Alex Wright of Fidelity International

Fidelity's Alex Wright: People have misunderstood OMV Russia exposure

'Sentiment is overly pessimistic'

clock 23 June 2022 • 3 min read
Trustpilot