WORLDVIEW: Interpreting impact on two JSE stocks of war between investment models

By Alec Hogg

When it comes to growing wealth, sentiment doesn't count. Only the returns matter. So for most of us, the war of words between active and passive investment managers is of little more than passing interest. But for those in the kitchen, it's existential.

Active asset managers are finding it increasingly difficult to defend a business model built for a different era. Low inflation of recent years has resulted in lower returns. That, in turn, amplifies the impact of costs on net performance. A couple percentage points in fees becomes a lot more relevant at average annual returns of 6% than they were during the high inflation period where 15% was the norm.

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