Passive Investment

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Active fund managers continually buy and sell their holdings to meet their investment objectives. This ‘portfolio turnover’ can be significant with corresponding costs that eat into your returns. We use low charging funds that follow indices as well as similar funds that have mechanisms to focus on particular market elements thereby retaining the potential to outperform the main markets.

We build our client portfolios to suit individual risk profiles and investment objectives by choosing from the growing number of passive and 'enhanced index tracker' type funds. By removing the need for a fund manager we can save management costs.

An index is a group of securities designed to represent a broad market. It provides a benchmark for that market’s performance. The range of funds available is growing apace and investors can gain access to various UK and global markets. These types of fund offer:

Diversification - they can be an ideal way to achieve diversification, as they hold all (or a representative sample) of the securities in the target benchmarks.

Low costs - as index funds track a target benchmark they generally have lower advisory fees, operating expenses and trading costs than actively managed funds. 

Ease of understanding -the funds have precise objectives - to track various indices - and the charges are clearly expressed with no extra costs hidden in small print.

N.B You should remember that index and passive funds don’t lower overall market risk. When the stockmarket falls, the price of shares in an index fund falls too.