Mr Darbyshire agrees. He prefers trackers to exchange-traded funds in many cases. He trades stock and bond baskets directly and deploys equity futures to avoid trading frictions that can occur with buying direct equities. He is also a strong proponent of the investment trend ‘smart beta’.
“Most of the innovation we are seeing right now is in the passive space; it seems to be continually evolving,” he says.
But in some areas of the market, passive replication is simply not possible. Mr Wallin identifies a major shortcoming as the lack of long/short or “manager-skilled” presence.
He says: “I am looking to build a portfolio from a universe containing all the asset classes available, with no limitations on my access. The biggest holes in many multi-asset offerings seem to be in their alternatives package. That is a weakness from our perspective.”
Sam Shaw is a freelance journalist
Passive investing in numbers
2007: 7IM launches its Asset Allocated Passive range of products
27: The number of asset allocators in the team at Legal & General Investments
5: Number of funds in the AAP range run by 7IM
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