Tracker funds’ performance critiqued

Patrick Connolly is head of communications with independent financial adviser AWD Chase de Vere.

Independent financial advice firm Chase de Vere has said new research showed most tracker funds under-performing, compared with actively managed funds in their investment sector.

The study followed similar analysis undertaken by Chase de Vere six months ago.

Despite typically having much lower charges than actively managed funds, trackers don’t necessarily provide good value for investors, Chase de Vere said.

The only region where the firm found a passive approach producing above-average performance was in North America.

“This is perhaps the most efficient market in the world and a region where active managers have notoriously found it difficult to perform well,” the company added. Chase de Vere looked at the five and 10-year performance of the mainstream tracker funds. These were then compared with the performance of the other funds in their relevant investment sector.

Patrick Connolly, certified financial planner, Chase de Vere, said: “The popularity of tracker funds is due to their low charges and a general perception this should result in them performing well over the longer-term. Our research shows this could be an incorrect assumption.”

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