The importance of investing with a genuinely active manager

How hunting down truly great companies can deliver market-beating returns for investors

Woods and road seen from above

The relentless rise in the popularity of passive investing (where investors buy index funds that simply aim to mirror the performance of an underlying benchmark, less fees) has put the active fund management industry under a sometimes uncomfortable spotlight. If investors can enjoy market returns while paying lower fees, why should they trust their money to active managers who charge more, yet often struggle even to match the market? It’s a question to which many active managers have struggled to deliver a convincing answer.

At Nutshell, we believe that active management can deliver market-beating returns, while potentially reducing volatility and cushioning an investor’s capital during bear markets. But it’s important to find a genuinely active manager. If your manager is simply going to hug the index, you might as well invest in a passive fund, which will charge you less for the privilege. So what makes a genuinely active manager?

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