What do you think of using unit trusts for inefficient markets such as China and ETFs for efficient markets like US?

10-year historical performance compiled by Morningstar indicated that for emerging market stocks, actively managed unit trusts managed to outperform passive ETFs by 1.3% p.a., during the period of 2010-2019 on a net-of-fees basis.

In contrast for US large cap stocks, actively managed unit trusts underperformed by 1.9% p.a. compared to passive ETFs during the same period on a net-of-fees basis.

For the US stock market, with the high transparency around corporate disclosures and the breadth of stock research coverage, active fund managers may find it difficult to add enough value to justify the extra management fees being charged, leading to structural underperformance of active managers there.

Hence, I personally agree with your view!

I have documented more details in this article, if you are keen to explore further: https://theinvestquest.com/when-to-use-active-m...