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Four in five investors cannot differentiate between passive and active

Over four in five investors do not know the difference between active and passive investments, according to Invesco Perpetual.

The survey, conducted by Gfk NOP for Invesco Perpetual, reveals that 83 per cent of investors do not understand the differences between the two investment types. Of the respondents with no investments at all showed a figure of 86 per cent.

Even when prompted, most investors did not correctly identify the definitions of a passive or active fund, with 22 per cent and 25 per cent selecting correctly.

Over a quarter of investors could not even hazard a guess at what passive and active investments are, with 29 per cent and 26 per cent respectively.

Invesco Perpetual marketing director Rick White says: The fact that so many investors do not know the difference between these two very different investment styles is extremely worrying.

There is certainly a strong role for advice as well as clearer information provision for the future – financial advice is a crucial element in improving understanding and buying/selling decisions for the majority of investors.

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