Guide to Passive Investing


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Welcome to the podcast from Morningstar UK, the leading provider of independent investment research. This week we’re going to take a look at Passive investing. When Jack Bogle, founder of Vanguard Asset Management launched the first passive fund in 1975 he was called “un-American”. The financial industry was so against his plan to revolutionise the way that we invest, a campaign was mounted insinuating Bogle was unpatriotic and a fool. Fast forward three decades and new money invested in passive funds is growing at much faster pace than actively managed funds. In the US last month, investors pulled $18 billion out of active funds, but invested $49 billion into passive funds. The story is similar this side of the pond, the fastest growing part of the market is passively managed funds – and in particular those which are “smart”, or “strategic” and offer investors access to a certain slice of the market. But what exactly is a passive fund? And are they better than actively-manged funds in all circumstances? When should you opt for passive, and what role should an ETF play in your portfolio? Lets first go to Dan Kemp, Chief Investment Officer for Morningstar Investment Management who explains the benefits of using passive funds in an investment portfolio.

Up next Christine Benz for Morningstar speaks with Vanguard founder Jack Bogle himself about how Investors need to look at how unnecessary fund costs are eating away at their investment gains.

So What exactly is the Difference Between an ETF and a Tracker Fund? Morningstar Passive fund analyst Kenneth Lamont is up next to explain.

ETF providers are very transparent when it comes to replication and will explicitly disclose whether an ETF is physical or synthetic in the kit and prospectus. But if you’re still confused our very own Passive Fund Expert and senior analyst Jose Garcia Zarate is here to clear things up about the differences between Physical and Synthetically Backed ETFs

Did you know you can minimise the volatility of emerging markets through ETFs? Or focus on income? Or gain access to the whole market for a fee of just 0.2%? Senior editor for Morningstar Emma Wall and Passive fund Analyst Mornika Dutt are up next to discuss different ways to profit from an emerging market rally

Lets go back to Christine Benz and Jack bogle who discuss the issue of risk and why Investors should not be tempted to take on too much of it in retirement.

ETFs have grown in popularity as investors cotton on to the impact of cost on real returns - and now passive funds can be used to build a diversified a profitable portfolio. Senior editor Emma Wall discusses with Our final guest, Ursula Marchioni Chief Strategist for iShares on how to get the most out of ETF’s when using them I your portfolio.

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