Passive funds consistently underperform both the index they are tracking and the average actively-managed fund over the long-term, T. Bailey claims.
While passive funds are marketed on their ability to access indices own performance, T. Bailey disputes whether they can actually track the index closely. The multi-manager boutique compared the performance of FTSE All-Share index tracking funds with active funds in the IMA UK All Companies sector relative to the FTSE All-Share index over 15 years using Lipper data. The resulting research found that while both underperformed the index trackers fared worse. The FTSE All-Share Index tracker funds underperformed the index by 24.7% on average. T. Bailey says there are two areas where perf...
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