Passive index funds vs Actively managed funds (outside US)? - Seedly



Asked by Shaun Ong

Asked on 24 Oct 2018

Passive index funds vs Actively managed funds (outside US)?

I've been told that buying a passively managed index outperforms most actively managed funds (once fees are deducted). However, I've recently been told that this only really applies to the US index because the US market is efficient.

If I want to invest outside the US, should I just buy the index or should I buy one of the actively managed funds?


Answers (1)

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When index investing, you'll need to look at the index that you're planning to track. How efficient it is, the weightage of companies in it, how diversified are the businesses. Not all indices are made the same, no two countries indices are also built the same way.

When you purchase an actively managed fund, you choose what you want to invest in. The merket cap of the companies, the industry you want to invest in, the philosophy and fund mandate of the investment manager. It's up to you.

Every fund is different and this is not a clear cut answer, you'll need to do some investment planning and choose the portfolio you're planning to create and hold.