The risks of passive investing

Kira Nickerson on the risks investors need to consider when entering passive funds.

Investors entering passive investment funds need to be careful they understand what it is they are buying. Active funds are often seen as carrying a higher risk level but tracking funds are not without their pitfalls and as this area of the market expands, greater attention is warranted. Tracker funds Peter Robertson, head of retail at US passive management giant Vanguard, notes there are several ways tracking funds operate and it is vital consumers know which one they are buying. There are funds that replicate the index they follow, those that track using a sampling, and then the...