David Liddell talkes to Emma Agyemang from Investors Chronicle.
He states ‘Active funds can also be useful when investing in emerging markets as these are often under-researched . . . . This means their investment teams are able to use local knowledge and their research capabilities to find hidden gems.
Investment trusts in particular can take long-term bets on these as they do not have to sell assets to meet investor redemptions.
But the ability to invest strategically and with conviction can also be a major drawback for active funds if their managers’ views are wrong. And as active funds are more expensive than passive funds investors can end up paying more for a poorly performing fund that does not beat the index.