Insights

It Can Pay to Be an Active Investor

Active-vs-Passive-Investing

The debate on active vs passive investing has been raging for years but with no clear winner. Highly skilled active equity managers can certainly beat the market by a wide margin, more than justifying their higher fees. Just look at the long term track records of managers such as Lindsell Train, for example. But talented active equity managers are a rare breed and their performance is often volatile whereas passive funds, by definition, deliver more predictable market-like returns and come with a much lower price tag.

In recent years, passive funds have been in the ascendancy. With the rising tide of ultra loose monetary policy floating all asset prices, it has been hard for active managers to outperform. But with volatility returning with a vengeance as the monetary water starts to go out, buying the whole market with an index fund may not be smartest move. Selective stock picking is probably the more intelligent approach to this new market environment.

The same is true of today’s property market. In a world of high equity and bond prices, it’s important to retain a diversified portfolio that includes alternatives, such as real estate. But not just any real estate. With the shadow of Brexit and economic uncertainty hanging over them, neither the domestic nor the commercial real estate markets are sending a clear signal about the future direction of prices at the moment. And hidden beneath flat national averages there are huge regional variations.

For example, the Royal Institution of Chartered Surveyors (RICS) thinks prices overall will be flat this year but, within this context, predicts falls in London and the southeast and strong gains in Northern Ireland, Scotland and Wales, where it expects prices to get back to the levels seen before the financial crisis. “It is not a market but a series of markets, as surveyors keep reminding me,” says Simon Robinson, chief economist at RICS.

In such an environment, investors need to keep their wits about them and choose each property on its individual merits. It means rolling up your sleeves and digging into the details of the deal to ensure you sift the potential winners from the losers. As an independent marketplace platform, Property Crowd doesn’t make any recommendations about the attractiveness of one deal versus another. But we do strive to bring high quality deals to the market and make as much information available as possible about them to enable you make a comprehensive assessment of each opportunity. We encourage you to make full use of the market intelligence and data available in our deals rooms to determine your allocations to real estate.

As Featured In