This makes it very difficult to assess whether performance is based on stock-picking abilities, or due to a style tailwind.
However, we generally see investing in active managers as good value for money, and we do not mind paying more for a manager who has consistently outperformed.
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We employ passive holdings where we think active managers struggle to beat the market.
In areas where we invest thematically, such as healthcare and insurance, we believe active managers have the specialist knowledge, resources and expertise to choose the good companies from the bad.
Elliott Frost is investment manager at Lumin Wealth
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