Cover of MoneyWeek magazine issue no 638

Precious water

3 May 2013 / Issue 638

The world’s most valuable commodity

PLUS:

  • The world’s most exciting emerging market
  • How to solve the problem of overpaid bosses
  • How I made millions from bathrooms

Excerpt

Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

How to pick a fund manager

I was asked to speak at a seminar put on by a big fund management group this week. I was to talk about the pros and cons of ‘active’ and ‘passive’ investing and give the ‘final answer’ on which serves investors best.

This was a pretty brave call from a firm devoted to active management, given the stand MoneyWeek has taken over the years on fund-manager over-charging and incompetence. But it wasn’t quite as bad as you might think – mostly because there isn’t really any such thing as passive investing.

When you put money into any sort of index tracker, you make two big, active decisions along the way. You decide on your asset allocation. Are you going to have your money in Japan? Britain? In commodities? In emerging-market bonds?

If you bought a big global investment trust, these decisions would be taken out of your hands. But if you go ‘passive’, you decide those things yourself.

But that’s not the only decision you make.

• Read the full editor’s letter here: How to pick a manager.