Passive funds get time to shine: Kernel

Markets have dropped considerably over the past week. The NZX50 closed down almost 5% on Thursday.

Some KiwiSaver managers in particular have reported sharp increases in calls from worried investors – and active managers have taken the opportunity to promote their hands-on approach to management as a way of reducing investor losses.

But Anderson said their claim that they would outperform in a falling market would make it harder for them to sell themselves once the rebound happened and markets start to rise again.

“If anything this will create the greatest opportunity for passive in the next decade,” he said. “What do you want to buy when the market has bottomed out? Active has said it’s hard to beat passive in a bull market … they’ve told everyone they add value in a downturn, if the market has bottomed out what are you going to buy after that?”