Darius McDermott, managing director at FundCalibre, argues an obsession with cost at the expense of value risks obscuring the benefits active management can offer investors.
Importance of research
Independent ratings and research agencies have an important role to play. For example, FundCalibre uses a proprietary tool to determine not only which funds have delivered strong alpha in the past, but also which vehicles have the best chances of continuing to beat their benchmarks over the long term.
Crucially, it also uses total returns after fees, which addresses one of the FCA study's concerns that funds on many 'best buy lists' or ratings platforms had not outperformed their benchmarks after costs.
As we read through what will undoubtedly be many hundreds more column inches dedicated to active versus passive management and the FCA recommendations in the coming months, my one petition would be this: let us not allow the argument to become too binary.
Investors look to us for guidance. We do them a great disservice if we don't provide a balanced view.
