LGIM's Ellis criticises low-cost active funds after Fidelity launch

Legal & General Investment Management's Simon Ellis has warned the low-cost active funds entering the market are not viable options for investors because of their low return targets.

In a week which saw Fidelity become the latest house to launch a range of low-cost active products, Ellis said the concept of low-cost active funds is driven by a desire to grow market share rather than provide a sustainable investment product. He said: “They are doing it because they want to compete in the low cost funds market. “However, the numbers on many low-cost active funds simply do not add up. They should be called ‘toxic trackers’ because ultimately they are asymmetric bets.” Ellis said if an active tracker fund was trying to outperform an index, it would have to take a d...