Partner insight: Which is better for multi-asset - active or passive?

Passive funds have outperformed over the past 10 years but may not do so forever, says Henk-Jan Rikkerink

clock • 1 min read
Partner insight: Which is better for multi-asset - active or passive?

With inflation at high levels, advisers are paying closer attention to costs than ever before. As a result, passive funds have continued to appeal.

The cost advantages of passive funds are well known, and last year, Fidelity was able to reduce the ongoing charges figure (OCF) across its passive Multi Asset Allocator fund range from 0.25% to 0.2%.

Performance has played a part in passive's appeal too, of course. "We've been in a world where passive funds have beaten lots of active funds," says Rikkerink. "We may not be in that world forever, but we have been for the last 10 years in large parts of the market."

That said, many investors continue to prefer active products, and Rikkerink puts this down to risk-return calculations. "Certainly, we're of the belief that even though the sticker price might be a little bit higher, the extra return you get from adding in private markets can make sense in some portfolios," he says.

"But by no means will all clients be willing to go down that route," he adds. "There will be a range of different demands out there and it won't be in every product."

 

 

More on Economics / Markets

Five key takeaways from the Spring Statement 2025

Five key takeaways from the Spring Statement 2025

OBR growth, ISA reforms and defence

Sorin Dojan
clock 27 March 2025 • 4 min read
Bank of England halts interest rate cuts amid ongoing inflation

Bank of England halts interest rate cuts amid ongoing inflation

As priced in by markets

Sorin Dojan
clock 20 March 2025 • 2 min read
More work needed to tackle inflation as BoE members warn of further market turmoil

More work needed to tackle inflation as BoE members warn of further market turmoil

BoE MPC members spoke at Treasury Committee hearing

Sorin Dojan
clock 06 March 2025 • 2 min read

In-depth

MPS movers: Why Quilter, Tatton, Waverton came out on top

MPS movers: Why Quilter, Tatton, Waverton came out on top

Less launches expected as industry has ‘seen the peak’

Isabel Baxter
clock 05 March 2025 • 5 min read
Driving change in advice: The importance of visible female leadership

Driving change in advice: The importance of visible female leadership

Leveraging International Women’s Day to boost awareness of financial planning careers

Sahar Nazir
clock 06 March 2025 • 6 min read
How FCA could tackle review of 'opaque' MPS market

How FCA could tackle review of 'opaque' MPS market

Target market an expected focus as propositions have ‘questions to answer’

Isabel Baxter
clock 03 March 2025 • 4 min read