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MAXIMUM EXPOSURE

Passive investing is gaining traction as price wars, regulation and political uncertainty take the shine off active management

Investment strategies Passive investing

Wealth managers have not traditionally allocated large chunks of their portfolios to passive investment strategies, preferring instead to opt for active stockpickers.

This trend was borne out in a recent study by research provider Wealth-X that quizzed 36 wealth managers. It found that on average just 9% of assets in portfolios contained index-tracking products. More than a quarter of those surveyed had absolutely none of their clients’ portfolios in passive.

But with fees and transparency under close scrutiny, as well as a tumultuous political environment and rising inflation, passive investment strategies are beginning to find favour among wealth managers looking for low-cost exposure across asset classes.

Price wars

The drive for lower costs has been dominated lately by the so-called ‘price wars’, as providers have attempted to undercut each other at every opportunity.

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