Tue, Apr 24, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

It’s all about size in the active/passive pension investment debate

Wednesday, October 23, 2013

Beverly Chandler, Opalesque London:

Research paper The Governance Revolution from Evercore Pan-Asset (EPA) finds that passive investment funds cost less than active ones, and perform better over most time periods. The paper analysed 14 equity, bond and alternative asset classes, revealing that passive funds performed better than the median actively-managed fund in all but one case over the past five years.

This performance was repeated over three years, where passive funds performed better in 12 out of the 14 asset classes. Across all asset classes, on average, passive funds out-performed active funds by 6.5% over five years. For a £50m ($80m) pension scheme, this under performance would mean that an entirely passive portfolio would save £3.6m ($5.8m) compared with a portfolio of median active managers over five years.

Scale was crucial with EPA recommending that smaller UK defined benefit pension schemes with less than £250m in assets, should consider adopting a 100% passive approach, using the time and cost savings this generates to focus greater attention on asset allocation.

In terms of exposure to hedge funds, EPA commented: "It is possible to invest passively in hedge funds through hedge fund ETFs, but there are few options. Some vehicles are not 'passive’ in any normal sense, as they do not track an independent index. For la......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Sequoia takes Facebook stake as shares slide in data controversy, $1.4b hedge fund sees intact fundamentals for Facebook, Jim Cramer reveals some 'suggested hedge fund trades' amid the Trump tariffs[more]

    Sequoia takes Facebook stake as shares slide in data controversy From Bloomberg.com: The $4.2 billion Sequoia Fund bought a small position in Facebook Inc. as the stock slid late in the first quarter, investment manager Ruane, Cunniff & Goldfarb told clients. "The recent controversy enab

  2. Activist Investors - Blue Sky-owned Wild Breads faces uncertain future[more]

    From AFR.com: A Blue Sky private equity investment in artisan-style baker Wild Breads enjoyed multiple valuation upgrades despite losing millions and breaching its lending covenants, accounts lodged with the regulator last week show. Wild Breads lost $2.4 million in 2017, but Blue Sky ascribed a hig

  3. Opalesque Exclusive: Barnegat to close hedge fund to outside investors on weak opportunities[more]

    Komfie Manalo, Opalesque Asia: Bob Treue's Barnegat Fund Management said it is closing its $666m fixed income relative value hedge fund to outside investors. "The negative side to gains in Fixed Income Arbitrage is that unless we find new opportunit

  4. Investing - Hedge fund makes a big bet on malls, British hedge fund manager Odey short UK government bonds on QE bet[more]

    Hedge fund makes a big bet on malls From Barrons.com: The dominant narrative on American shopping malls is that they're dead. Crushed by Amazon.com, many brick-and-mortar retail stores are destined for bankruptcy. And where is the most retail, clustered all together? Malls. From a

  5. Performance - Hedge funds suffer first back-to-back loss in two years, Netflix performance burns hedge fund short sellers, Macro hedge fund up 14.5% in first quarter sees dollar falling, Renaissance Technologies rebounds across hedge funds in March[more]

    Hedge funds suffer first back-to-back loss in two years From Bloomberg.com: Hedge Fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its