Fund managers push back on passive, say active ETF fees justified

InvestorDaily

While simply tracking the market (beta) with passive strategies might seem sufficient, many asset managers contend that active management is not just worthwhile, but often necessary given the structural quirks of fixed income indices and the heightened complexity of credit markets. Perpetual, one of Australia’s longest-serving active investment managers, recently launched its DIFF ETF, a unit class of the $2.4 billion Perpetual Diversified Income Fund (DIF). “In periods of uncertainty and volatility, active ETFs can play an important role in building a diversified portfolio,” said Greg Stock, Perpetual head of credit research and senior portfolio manager. “Fixed-income investors are facing lower returns due to falling interest rates and inflation and are looking for additional sources of income.”

Highlighting elevated equity valuations, uncertain growth outlooks and rising volatility reflecting geopolitical uncertainty, Stock said: “We feel that risk-focused active management is crucial to success in credit and fixed income markets.” He believes active ETFs stand apart from passive fixed income ETFs by giving managers the flexibility to respond to changing market risks.

The rest of this article can be found at investordaily.com.au.