Striking the balance between passive and active investing

Andrew Kemp, Liberty Corporate’s head of Investment Product.

As market volatility continues to put pressure on investors, striking the right balance between security and superior returns has become an increasingly important consideration when choosing where to invest.

According to Liberty Corporate’s head of Investment Product, Andrew Kemp, it is easy to get caught up in the passive and active investing debate about which investment style is most suitable for your retirement fund.

“Supporters of passive style investing point to the fact that passive investment styles have significantly lower costs than active managers and do not require a high level of trustee governance. Meanwhile, those in the active corner typically argue that – with specialised management – funds can deliver higher-than-index returns for investors and predict possible market downturns before they occur.

“The good news is that these two approaches need not be viewed as mutually exclusive and there is a unique opportunity to capitalise on the advantages of both,” says Kemp.

With a combined solution, he notes, trustees can enjoy the simplified decision making process that is associated with the high levels of passive investing governance while simultaneously having access to the expertise of skilled managers.

Kemp highlights the Liberty Stable Growth Fund, which now has R7bn in Assets Under Management (AUM), as an example of creating such a tailored solution to meet the dynamics of customer needs.

“The Fund’s objective is twofold; deliver inflation beating returns, while providing protection for members during volatile market conditions,” he says.

This is achieved through the Fund’s unique approach of utilising a predominantly passive approach to get exposure to markets, while implementing active risk management strategies to manage risk. This industry-leading approach has seen the fund grow significantly into Liberty Corporate’s largest investment offering, servicing notable large institutional clients.

Liberty Corporate claimed top spot in the Best Business to Business category in the Sunday Times’ Top Brands Award in 2014, in addition to other independent business awards.

“This recognition attests to the confidence clients have in Liberty and with this fund we have created something that is truly unique in the marketplace,” says Kemp. “The Fund has already attracted huge investment flows and we see even more growth ahead as we continue to expand on our current success over the next few years.”