UK fund manager Baillie Gifford has weighed into the active versus passive debate by criticising both sides and declaring itself to be an ‘actual’ investor.
The firm has accused active managers of failing to fulfil their fundamental purpose and to invest clients’ capital in tangible, sustainable activities.
As part of a new campaign to promote what Baillie Gifford calls ‘actual investing’, Baillie Gifford has called on the investment industry to refocus on its “fundamental objective”.
The term ‘active management’ has been hijacked by fund managers simply looking to be different to an index and focused on outsmarting other fund managers rather than the creative deployment of capital.
Edinburgh-based Baillie Gifford has also called for less emphasis on passive investing. While accepting that it provides low cost market access with better post-fee performance on average than active funds, the firm “does not believe investment decisions can be made on numbers alone, using super computers and complex algorithms”.
Furthermore, passive funds fail to allocate funds to innovative companies and cannot be considered “investing in the purest sense, said the fund manager.
According to director of retail marketing & distribution James Budden, the campaign is designed to make the point that “active investors are not homogenous” and to challenge investors and the industry to “discover a category of investment managers that truly believe in the fundamentals of investing and its benefits”.
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