Passive US equity versus UK funds
Does choosing a passive, US equity fund equity manager provide more options than a UK based fund?
Mr Kapadia observes a rise in passive equity funds across both sides of Atlantic.
“Currently, [UK passive equity funds] only make up for a smaller part of the market, but with the growing criticism surrounding active fund managers and their fees, the UK passive market will become more popular,” he says.
Mr Kapadia also points out that investors may be becoming too dependent on American passive shares, despite it being too expensive.
Mr Sumners says: “One of the benefits of passive investing in the US, is the range of indices available for investors to ‘track’”
He adds: “Whilst in the UK we are only used to dealing with the catch-all FTSE indices, or the AIM index, in the US investors can, in part, play out their investment views by choosing to track indices such as the S&P 500, the Dow Jones or the NASDAQ, along with a growing number of sector/thematic/style specific passive investment options. “
Mr Khalaf cautions that US market is overvalued relative to other markets.
He believes while the US market has been the stand out performer in the last few years, particularly due to a strong dollar, the UK has equally good fund groups.
Mr Khalaf adds: "The market does look overvalued relative to other markets, which presents a risk to investors, as does the potential for the pound to appreciate if there is a satisfactory resolution on Brexit, hard as that may seem to fathom."
saloni.sardana@ft.com
