The investment industry has done its best to polarise investors between active and passive investment strategies. This is a shame as great things can happen if you combine the two correctly, say portfolio managers Paul Craig and Rasmus Soegaard.
At first blush, the idea of building a range of long-term, multi-asset growth portfolios that combine the most desirable attributes of both active and passively managed (or tracker) funds, has much to commend it.
A keystone of our industry is the belief that, given time, talented active managers offer the potential for long- term outperformance of market indices. Meanwhile, it’s entirely evident that, these days, passive funds offer the means to track any number of market indices or industry sectors around the world for a fraction of the cost of active management.
However, in real life creating a ‘hybrid vehicle’ that captures the best of both worlds is fraught with challenges, both structural and cultural.
To combat these challenges and build a really effective portfolio offering, you also need to recognise that it’s not a ‘zero-sum game’ – you can’t just dial down the active managers in a portfolio and fill the gaps with passive holdings (or vice versus).
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