Rory Maguire: Could smart beta really replace active management?

Cause and effect not so clear

clock • 3 min read

As computers grow ever more powerful, the rise of smart beta strategies may seem inevitable but, argues Rory Maguire, there are some very human reasons to think it might not be

Over the past year, we have found ourselves increasingly being asked whether smart beta could replace traditional active management and so drive down investment fees. Computer-generated portfolios, the argument goes, could create strong alternatives to managers with a proven and predictable stylistic bias, such as Fundsmith or the Schroder Recovery team. The availability of ‘quality' and ‘deep-value' smart beta products would suggest their providers certainly think this is a possibility. Another strong argument is that we live in a world where there is so much data for humans to proce...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

Why China's journey to net zero demands investors' attention

Why China's journey to net zero demands investors' attention

China's journey towards net zero could yet prove more rapid than expected

Gabriel Sacks
clock 07 May 2025 • 4 min read
Morningstar CEO: Advisers and industry need 'shared language' around risk

Morningstar CEO: Advisers and industry need 'shared language' around risk

Kapoor points to UK regulation becoming more ‘goals focused’

Sahar Nazir
clock 07 May 2025 • 2 min read
PA360: 'Diversified approach has room for both active and passive' - David Coombs

PA360: 'Diversified approach has room for both active and passive' - David Coombs

‘Volatility is your friend if you are a long-term investor’

Jenna Brown
clock 01 May 2025 • 2 min read