7th October 2015
Five of the top 10 most traded funds over the past three months have been passive funds, according to the latest trading statistics from Interactive Investor.
Passive funds have become more popular over the past year because of greater choice, lower fees and the perceived lack of value for active investment. This has seen the number of investors choosing tracker funds soar, as investors look to simply manage their investments for the lowest cost.
Rebecca O’Keeffe, head of investment at Interactive Investor, says: “12 months ago, just one of our top 10 most traded funds was a tracker fund, but we have seen a significant shift towards passive investing over the past year and passive investments now represent over 25% of our net monthly sales.
“Low cost portfolios are straightforward and represent real value for money as well as delivering on performance, in particular during bull markets and when the benefits of accommodative central bank and government policy are helping the entire equity market.
“However, as you move into a different stage of the economic cycle and markets become more volatile, active management may have a greater role to play. Investors should potentially be wary of using either active or passive funds exclusively, as they both have their strengths at different stages of the economic cycle.
“The recent volatility and disparity in returns between the global FTSE100 and the more domestically orientated FTSE250 is also something for investors to consider. Passive investors may want to look beyond large cap tracker funds to make sure they are not missing out on the potential benefits of mid or small cap stocks.”
Top 10 most traded funds: 01 July – 30 September 2015:
1. CF Woodford Eq Income
2. AXA Framlington Biotech
3. Fundsmith Equity
4. Vanguard LifeStrategy 80% Equity
5. Neptune UK Mid Cap
6. Vanguard FTSE U.K.All Shr Idx
7. Vanguard LifeStrategy 100% Equity
8. Artemis Global Income
9. Vanguard LifeStrategy 60% Equity
10. Vanguard FTSE Dvp Wld Ex UK Eq Idx