Why passive funds are not low risk

Dominic McCormick | Select Asset Management | 12 March 2012

Outside of cash and term deposits, passive funds – either those replicating market indices or those providing certain factor exposures to traditional asset classes – have dominated the significantly lower retail asset inflows in recent times.

The greater use of passive funds to build portfolios – often using passive funds exclusively – seems to be driven by two key elements: 

1. A focus on low costs in a difficult investment ...