Since we published an article and a column about how high fees for actively-managed funds are provoking something of a revolt among investors, we have received some feedback from readers.
Here are a few points that were made by the clever Mark Dampier, head of research with the advisory firm Hargreaves Lansdown, which deserve your attention:
As you might expect I read your articles with interest last Saturday in relation to fund costs etc etc.
Now I agree that the ETFs do look at least in the first instance a little better.
That said when I see articles on trackers it would appear, at least from a consumer point of view, that you would assume that they do actually track the index. Nothing of course could be further from the truth. They are in fact all guaranteed underperformers.
Now I realise that the counterargument is that active funds don’t cover themselves in glory. I agree completely. The trouble is that the active industry is so vast that there are scores of underperforming funds. It still amazes me how much money just passively sits in these funds! That said there are clearly fantastic winners in the active industry too. I don’t think a pure analysis of costs necessarily helps, which says cheap is better and expensive worse. The likes of Philip Gibbs, Neil Woodford, William Littlewood, Crispin Odey show that some in the active industry can do well.
Lucy Warwick-Ching
Matthew Vincent
Alice Ross
Ellen Kelleher
Steve Lodge
Josephine Cumbo
Tanya Powley
Jonathan Eley