THE RISE OF PASSIVE FUNDS

Investment & Wealth Advice




SUMMARY

Recent research from Morningstar shows that tracker funds now have a 40% market share. Quentin Marshall, Head of the Private Bank, looks at the history of tracker funds and explains why they can offer our clients the perfect solution.

THE HISTORY OF PASSIVE FUNDS

The investment story of the 20th century was the professionalisation of money management.  DIY investing declined almost everywhere, to be replaced by the fund manager.  As the new millennium dawned, however, a new innovation in finance started to take-off.  No longer did investors need to pay through the nose to loosely track the market.  They could simply buy shares in line with a company’s value, cutting out the expensive middle man.  In investment speak, even small investors could now access the market efficiently by using tracker, also known as passive, funds. Are the days of the fund manager numbered?  Figures out recently confirmed that tracker funds were set to account for half of the US stock market by 2025.  In some case, fees on these funds have actually fallen to zero, well below the 1 percent (or more) per annum seen on some active funds.

WEATHERBYS & YOU

At Weatherbys Private bank, we offer investment advice.  When clients come to us looking to invest, we will occasionally recommend an active investment manager. What we will always do is recommend to our client that they choose the solution which will keep costs down.   For this reason, many clients find that a portfolio of tracker funds is the right option.  We help them create the right balance of tracker funds in their portfolio and then ensure that it doesn’t drift over time. And, true to the low cost philosophy, we don’t charge a penny for this service.

Past performance is not a guide to future performance. The value of an investment and its income can both increase and decrease and you may not get back the full amount originally invested. The value of overseas investments will be influenced by the rate of exchange.

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