The Challenges Active Fund Managers Face

Academics promoting passive investing have argued that active managers do a poor job of beating their respective benchmarks

Ruli Viljoen 26 September, 2017 | 4:52PM

Academics promoting passive investing have argued that active managers do a poor job of beating their respective benchmarks. Fees are the most cited reason for this underperformance, with a higher fee structure prompting investors to reconsider the value they are getting.

Lower fees will help end investors obtain better outcomes

This is combining with regulatory pressure and increased transparency, highlighting the ever-present importance of considering fee structures in the investment selection process. Yet, to comprehend the fee drag at a portfolio level, one must consider both the absolute level of returns that can be expected as well as the potential for gain. To illustrate, we must consider whether an investment can generate value, and this is commonly achieved by dealing with the dispersion of returns.

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About Author

Ruli Viljoen

Ruli Viljoen  is Head of Manager Selection, Morningstar UK

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