Laith Khalaf, senior analyst at Hargreaves Lansdown, says many managers probably look more active given the volatile performance of mega caps, in particular oil, mining and banks.
“Managers are generally loath to hold more than a couple of per cent of their portfolio in one single stock and so the big hitters in the FTSE tend to be under-represented in portfolios. I think there is a gradual shift away from closet-tracker products because they are getting pinched by genuine tracker funds on price and by more active funds on performance.
“There is still a lot of money invested in closet trackers, many of which were set up years ago and are simply doing what they say on the tin. Many investors hardly ever review their pensions and investment plans and consequently end up holding on to these lacklustre funds for years.”
Nyree Stewart is features editor at Investment Adviser
