Alpha seeks refuge in surging passive management market

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The Inside Network launches its first Equities and Growth Assets Symposium

The role of passive investment funds has evolved in wake of the most volatile year for markets in recent memory, and as many investors scramble to affordably diversify their portfolios, financial advisers must change how they think about passive strategies in their clients’ portfolios, according to some of Australia’s leading investment managers.

To help advisers navigate these complicated markets, The Inside Network is returning to face-to-face events with its first Equities and Growth Assets Symposium, welcoming financial advisers, asset consultants and family offices to collaborate and discuss the challenges and opportunities for equities and other growth assets at a time when global markets are entering uncharted territory.

This investment event will run over two days, with the first event launching in Melbourne on 4th May, and in Sydney on 18th May.

Angela Ashton, Founder and Director of Evergreen Consultants, said that advisers must remain carefully diversified even while exploring new investment vehicles.

“Advisers must remain vigilant as we move through a dynamic and volatile investment landscape across the equities sector. The uncertainty surrounding the current geo-political situation, cracks in the vaccine rollout globally and the threat of rising inflation are just some of the issues we investors must think about, along with the advent of many new investment products,” said Ms Ashton.

“For a long time, funds that invested for growth and quality were the strong performers, but in this climate that may no longer be the case and there is a conversation emerging about whether value investing is back, so when considering adequate diversity across products and strategies, investment style is very important right now. What investors and advisers really need to be doing is deeply interrogating what factors are causing managers and funds to perform, rather than trying to pick winners based on performance, and diversification within asset exposures is crucial,” she said.

Ms Ashton will be speaking on day two of the Equities and Growth Assets Symposium, alongside a panel on tactically adding Alpha to portfolios, in particular exploring the potential of passive strategies to support this role.

“Managers who claim to be generating Alpha through passive investment vehicles, particularly ETFs, are either saying that they are an excellent market timer, or they are investing in ETF products that expose them to strategies or investments that have previously only been available through active investments,” said Ms Ashton.

“This is now more possible than ever and building a portfolio through ETF options is a great way to bring down fees, but it comes at the cost of some of the advantages that active management brings in challenging times. Some managers are able to remain agile while navigating through hard times, and a lot of active managers outperformed last year by moving quickly to capitalise on opportunities brought on by the market drop and increased volatility,” she said.

Also slated to speak at the conference, Kanish Chugh, Head of Distribution at ETF Securities.

He added: “Both active and passive ETFs have risen to the forefront of investing and calls on both investors and advisers to reinvent the role of ETF vehicles in modern portfolios.

“The ETF sector has recently crossed the $100 billion benchmark in inflows and with over 220 active and passive ETFs available today. Investors now have access to a range of strategies well beyond what we’ve witnessed previously. Now is the time to challenge the thinking that has driven ETF investing for decades,” said Mr Chugh.

“Ten years ago, ETFs were generally only used to gain very broad market exposure to a traditional asset class. Today, advisers can build an entire portfolio using these vehicles, applying the benefits of instant diversification, lower fees, increased liquidity, and tax efficiency across all their investments.

“The flexibility to scale up allocations in small amounts and the availability of a wide variety of alternative investments will continue to drive the growth and success of the ETF sector. It serves as a highly accessible avenue to support the wealth generation of Australians, particularly as we navigate ongoing uncertainty in equity markets,” he said.

Jamie Nemtsas, Founder and Director, The Inside Network said: “Equities were incredibly resilient in 2020 despite facing a global pandemic, economic lockdowns and heightened geopolitical tensions. Yet with the vaccine now rolling out and both fiscal and monetary policy continuing, concern is growing about the potential impacts of inflation on heighted market valuations. However in comparison to most other asset classes, but particularly fixed income, one could suggest equities still offer the strongest risk-adjusted returns.

“How should investors be positioning equity portfolios in such an uncertain environment? According to Inside Network’s Advisory Committee, the three most important drivers of equity market performance in 2021 and beyond are expected to be the growing influence of China, the evolution of monetary and fiscal policy and the continued digitisation of the global economy.

“We welcome William Mitchell, from the University of Newcastle and Australia’s pre-eminent expert on Modern Monetary Theory, to offer unique insights into the evolution of fiscal and monetary policy and what this means for investors.

“We also look forward to discussions with Matt Gertken from BCA Research for  insights into China’s growing power within the global economy,” he added.

Limited Media Passes Available

Complimentary media passes are available for Sydney and Melbourne events for the Equities and Growth Assets Symposium.  Please contact Matt Lee at Shed Connect for your media pass via

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