What to look for in an active fund manager

SPONSORED CONTENT – Chosen wisely, an active fund manager can add a great deal of value to your investment portfolio

We live in an era of industry disruption, and the investment business is no exception. Not so long ago, most private investors put their money to work in a fund that was actively managed, with the aim of delivering a better return than the market. But the last few decades have seen the remorseless rise of “tracker funds”, which simply aim to copy the performance of an underlying market by mechanically investing in the businesses within an index.

This rise to dominance has been led by exchange-traded funds (ETFs). In the US, for example, ETFs now outsell traditional mutual funds on a month-to-month basis. At the end of 2019, inflows into these passive, index-tracking funds had totalled $570.5bn, up 10.6% according to London-based consultancy ETFGI. ETFGI also reported that “the ETF industry globally is $2.5 trillion bigger than the hedge fund industry”. An even more astonishing figure to note is that in the US, just ten of these ETFs now account for a staggering 28% of total US assets under the control of all fund managers.

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MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.