Fund flows: Investors are wising up

As you know, our Greenstone Portfolios reflect a systematic and evidence based approach to investment. We have spoken of the difficulties that go with choosing an active – or ‘judgmental’ – fund manager who will deliver market-beating returns. We believe that investors entrusting their capital to active managers risk an unnecessary transfer of their wealth in the form of high costs. They may also suffer the fate of returns lower than that of the benchmark over the longer term, evidenced by the track record of many active managers.

Recent history has seen investors transferring their wealth from active into typically lower cost index tracking funds. This is good news for investors and the investment industry as a whole. Due to the lower cost solutions being used, investors should benefit from a lower ‘cost drag’ and receive returns closer to the market. This move also gives an opportunity and incent