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Big firms to move into enhanced trackers

Legal & General Investments managing director Simon Ellis says he expects a number of large asset managers to move into the enhanced tracker sector in the next couple of years.

Ellis says some big providers do not want to compete with pure index and ETF offerings already in the marketplace but warns he does not see a huge upside to “enhanced indexing”.

Enhanced trackers are typically products that follow an index but add active bets on top to beat the index.

He says: “The history of enhanced products on a global scale has been poor. The vast majority of these quantitative models use the same factors, which means that if things go wrong, all these products go wrong at the same time. Such products are over-complicating simple investor aims to get exposure to the market as cheaply as possible.

“A lot of the bigger guys are going to come out with these products that charge between passive and active fees to add small layers of performance when things go right in the markets. There is little reward for IFAs or investors.”

Ellis also predicts the proportion of investments into index trackers will jump in the next five years from around 3-4 per cent to 10 per cent, a move he says will be down to more than just cost. He says: “I expect a lot of advisers will say it is easier to manage passive rather than active funds.”



FSA concern at absolute return fund labelling

Fund firms say the FSA is privately advising them against using the term “absolute return” when launching new funds as it creates the impression that growth is guaranteed. OPM Fund Management chief investment officer Tony Yousefian was planning to launch a fund using the absolute return label, but says the FSA expressed concern over the […]


Lenders hit back at Cameron criticism

Lenders have slammed Prime Minister David Cameron’s claims that they are holding back the housing market by lending too cautiously. Last week, Cameron called on lenders to return to “respectable” lending to get the housing market moving. Building Societies Association head of mortgage policy Paul Broadhead says the Government cannot criticise lenders for being more […]

Another bank in line for fine as FSA hits RBS and NatWest with £2.8m penalty

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N&P chief exec Matthew Bullock quits

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Global income: preparing for a rate rise…

In the five years since we launched the Artemis Global Income Fund, its manager Jacob de Tusch-Lec has built a distinctive portfolio that is first among its peers. Here he explains why his “quality, cyclical and value yield” stocks, and flexible approach, leave the fund better placed to benefit from uncertainty than funds that depend […]


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