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Both active and passive fund models are flawed

Fund managers charge for their services. So active funds must beat the overall market by at least this amount for you to maintain even average index returns after costs. These higher than average returns can only be achieved through greater risk.

One of the flaws of this active fund model is that you're exposed to the downside of greater risk without benefiting from the full upside. And research consistently shows that over 70% of fund managers fail to deliver even average market returns.

An index or ‘passive' fund seeks to replicate a stock exchange index at all times. This means repeatedly buying and selling significant volumes of the same stock over a year - which incurs transaction and tax costs. An important flaw of index funds is that investment performance is adversely affected by the cost of investment churn.

Asset class investment delivers performance

We provide access to a diverse blend of assets through a variety of investment pools. These pools provide global exposure to thousands of underlying equities and defensive assets such as property and fixed interest products.

With an adviser, you choose an investment pool with the most appropriate asset class exposure to suit your personal circumstances and goals.

These portfolios avoid the risk of concentrating investments, which can occur when investors own multiple actively managed funds.
Investors should seek to minimise risk by diversification. But the diversification must be at the asset or investment level rather than at the fund manager level to be effective.

Transaction and tax costs are minimised

This asset allocation model follows a longer-term buy and hold strategy which minimises both transaction and tax costs. On a compounded basis over many years, these cost savings can significantly boost investment performance.