Investing can be a confusing business. Never mind the jargon – the sheer choice available to private investors can be overwhelming. More than 3,000 open end funds, 300 investment trusts, thousands of exchange traded funds and scores of stock markets containing hundreds of stocks.
Fund investing can be broken down into two broad categories – active and passive. A fund is an investment vehicle that allows a large number of people to pool their money together in order to invest in a range of different securities such as stocks and bonds.
Active fund management involves an individual or team taking an active position in a company or fixed income instrument. While these funds often list an index as a benchmark for comparison their holdings can differ widely from that of the comparative stock market. These active decisions, when executed successfully can mean considerable outperformance of this benchmark. It can also lead to significant underperformance as well however – and the loss of investors’ capital.
Passive investing, using tracker funds or exchange traded funds are a pooled investment fund, where an individual can gain exposure to a particular index or commodity, providing the investor with the same returns as the underlying market. While these tools can never outperform the index that they track they will only ever underperform it by the cost of the investment – which can be as little as 0.2% a year.
This week we will be examining the benefits of these two investment approaches, listening to how the experts use the tools at their fingertips, finding out whether you prefer one to the other and examining how to blend active and passive investing for profit.
Monday: How do you Invest?
What is the UK investor choosing for their portfolio, and what is available in the market
Do You Invest in Passive Funds?
Why You Can't Afford Not to Invest
Tuesday: The Positives for Passives
All about the benefits of tracker funds and ETFs
What are the Benefits of Passive Investing?
How Analysts Rate Passive Funds
Will Passives Become too Popular?
Passive Investing: What is Smart Beta?
Wednesday: When Does it Pay to Go Active?
When does an active fund manager really earn their fee?
3 Fund Managers that Earn their Fee
How Investment Trusts Use Gearing
3 Investment Trusts that Boost Returns with Gearing
Stock Market Will Move Sideways for 9 Months
Thursday: Blending Active and Passives for Portfolio Success
How to get the most out the UK investment market
The Benefits of Active and Passive Funds
Using Passive Funds to Build a Portfolio
Passive Investing in Active ETFs
Active vs Passive is the Wrong Question
Active vs Passive: Is it Just About Cost?
Friday: Building Blocks for Retirement
Long term investors should consider these ideas for their pension portfolio
Passive Funds are Not Risk Free
3 Income Trusts for Your Pension Portfolio