MERs & Active Management

1 January, 2014

Why actively managed mutual funds can outperform in markets like these



Some Mutual Funds offer what is known as active management, and some closely mimic the investment indices. Some of you have heard the terms ‘active’ and ‘passive’ management before. But what do they actually mean? Passive management is most commonly used in ETF products, where an investor can purchase an entire sector or index, like the S&P 500, in a single product, for example. There is little, if any, actual management. No market timing or individual stock picking is required in this type of product. These products tend to have low fees and can fare well in markets where everything is going up. Think of the tech boom in the late nineties when everything just kept rising in value, even if it eventually all came to a screeching halt. But what happens when the global economy is moderately healthy, most stock markets are considered fairly valued, and there are no obvious places to make money? 

This is where stock picking becomes really important, and we believe that this is the kind of market we are in this year. This is where actively managed products can really outperform. This is where you need top tier managers to pick out the gems in a sea of stocks where the winners aren’t obvious. You need managers that aren’t afraid to run funds that don’t simply mimic the indexes. The actively managed products we have chosen for your portfolios, especially those used in the ‘tactical’ positions, are selected specifically with this in mind. This is how we differentiate ourselves and the investments we are able to offer. This is how we give you the edge in an intelligent marketplace.