Active or Passive - Missing the Point!
Many articles have been written about active versus passive management. Active management aims to outperform a benchmark (such as the FTSE-World Index) by careful sector and stock selection. Passive management simply replicates the index and tracks it up and down. An actively managed investment fund will typically cost c. 0.75% per annum. Passive funds are available for 0.10% per annum or less.
The fact is that these arguments miss the point. There is a place for both management styles in a diversified portfolio. The most important ingredient is active risk management (ARM).
Who is putting their ARM around your investment or pension portfolio?
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