29 December 2014

Barry O'Neill contributes to an interesting article about 'Closet Trackers' in The Scotsman

Carbon’s Investment Director, Barry O’Neill is quoted in a very interesting article in today’s edition of The Scotsman. Jeff Salway’s article highlights why some financial investment firms have recently come under fire for overcharging ordinary investors and pension savers, basically for not doing the job investors think they are paying for.

These ‘closet trackers’ are fund managers who make investment decisions that almost mirror that of the index, however they charge their clients for active investment which is when the fund manager makes the investment decisions based on performance expectations, experience, instinct, and the client’s requirements.

According to recent research, investors are paying an average of 1.43 per cent for these funds whilst genuine tracker funds, which aim to mirror the index, are averaging a charge of only 0.61 percent.

In the article, Barry offers a possible explanation, “Their unwillingness to look too different from their peer group, for fear of getting it wrong and being sacked, is the main reason that lots of actively managed funds look and perform like the index they are investing in.”

The article also states that an estimated 30% of money invested in the main UK equity sectors is held in under-performing funds in which there is little active management.

The Financial Services Consumer Panel also highlighted the issue in a recent report that identified the need for financial investment firms to disclose what portion of a fund is actively managed. You can read the report here

You can also read Jeff Salway’s article in today’s edition of The Scotsman here

You can also see Barry O’Neill’s profile here

If you would like to discuss your financial planning options, please contact us with any questions you might have. You can do this by calling our head office on 0131 220 0000, or by emailing us at or you can also follow us on Facebook, Twitter or LinkedIn.

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