Richard Cayne on Active or Passively managed Funds ? Does it really need to be either or could it be Both?

 

Active or Passive? Does it really need to be either or could it be Both?

With all the economic turmoil, issues and virus concerns seemingly everywhere you turn, in markets all over the world, many people are trusting managers of active investment products. Why pay higher fees for players in a rigged, or at the very least an incredibly tumultuous, game? Passive investment managers charge lower fees whose decisions are dictated by a pre-determined structure and strategy.

“This is a very black and white point of view that will do your investments more harm than good,” says Richard Cayne of Meyer International. Richard advises his clients to carefully consider both strategies – they each have their pros and cons, and they both can be part of a profitable financial plan.

What is active investing?

An active investment manager is actively engaged in deciding what and when to buy and sell. This sounds simple, but it is actually a very complex, involved commitment. The manager must research extensively and be able to quickly absorb and analyse market data to make decisions that will beat the market. Considering all the variables that affect a financial instrument, this is a profound undertaking. This is why active investment managers charge higher fees. But how well do they perform? In recent years, not so well. According to Morningstar’s Active/Passive barometer, active funds have been underperforming passive funds, especially over longer time periods.

So why bother with them? Under certain conditions, active investing can pay off very well. Before you hand your money decisions, do some research. Is the manager an expert in the fund sector or emphasis? If the strategy is too general, this usually does not bode well for active management. Also, success with this strategy often relies on being first in to profit most. In more developed markets, this is difficult since there is literally a wealth of information available. Emerging markets and sectors will often require specialised access and insights that can help active investing thrive. Also, active investing can respond immediately to sudden changes in the financial world, like the recent Brexit vote.

What about passive investing?

While active investing relies on an individual analysis of a specific dataset, passive investing looks to the overall performance of a certain group of equities or debts. Passive investing focusses on a certain index like the S&P500 or the DJIA or a set exemplar from a specific sector or exchange. Then investments are chosen that match that given group. The idea is that while it may be hard to predict a single investment that will beat the market, the market, whatever that may be, will perform consistently and, in times of loss, will eventually correct and profit.

So, while passive investing may not reap huge returns, it offers the possibility of dependable, constant returns that investors may feel they have more control over (since they will know at any time what investments are being made).

Now, what to choose?

So, there are many variables that can affect both strategies, for good and for bad. It would then not be wise to write off one for the other. When making any financial decision, all possible scenarios and options should be weighed, from how much risk you want to take to whether you believe certain sectors or markets are worth special attention.

“You really need to be realistic about what type of returns you’re expecting from your portfolio over a set time period,” Richard Cayne counsels. “Both active and passive investment strategies have their place, you just need to be thoughtful about what their places are for you. A good financial advisor should be able to work with you and help you plan appropriate allocation.”

“Also, a lot of people forget that their investment decisions are not set in stone,” Richard adds. “Markets fluctuate, so should you. There’s no need to make adjustments at every report of a downturn or potential economic hiccup, but you definitely should revisit your portfolio regularly with your advisor to make sure it reflects market trends and your risk appetite.”

For more information on this or any other financial topics, please contact Richard at Meyer International in Bangkok Thailand.

How Financial Consultants Can Help You Plan a Better Retirement!

Life after retirement is something that most people look forward to and dream about but not that many spend as much time planning for it financially as they do dreaming about it. Planning for one’s future happy life after retirement is necessary because it is undeniably true that one day, when we retire from our job, our children settled in their lives and we are done with most all of our responsibilities, we all look forward to get back the life we once had without all these obligations.  All of us should look to a bright future and a happy retirement but dreaming about it isn’t enough.  One must plan financially if you want to actually do all the things you dream about doing at retirement stage says Richard Cayne at Meyer International.

Having lived in Tokyo, Japan for over 15 years Richard Cayne was one of the financial advisors there to advocate planning for your retirement as early as possible while time is on your side.  Japanese are clearly conservative people and it would make sense then to plan for ones future by investing in financial instruments which can provide the growth and return on your hard earned funds.  Leaving ones future to a government or company pension plan is not adequate these days.  Japanese in particular are good savers but with zero growth from bank deposits it is crucial to look at other options.   
 
Life after retirement can be fun and enjoyable only if we plan our retirement appropriately and well in advance. Expert and experienced financial consultants, like Richard Cayne Japan, can help you create a solid plan about your life as a retiree, by taking some of the following steps.    

What Can Financial Advisors Do For Your Retirement?

Any seasoned financial consultant will accomplish the following tasks to plan a suitable retirement for you.

Assess Present Situation & Financial Obligations

The first important step which a financial advisor takes for a good retirement plan is to assess the current financial situation and concerns of the client. The very first meeting between you and your financial advisor should clarify what overall financial position do you currently have, how much can you spend comfortably, what kind of life do you want after retirement and what financial plan is best suited for fulfilling all your needs and expectations. The experts will tell you in detail about all the benefits of a particular plan and what you must do to stay on track so you can achieve your goals.  

Figure Out the Financial Goals

The second important task done by the financial advisor is to figure out your financial objectives. This step requires a deep needs analysis. The financial professional gathers all the relevant financial data and assesses the financial objectives of the client. This data is then analyzed in detail and a report, based on earlier-done analysis, is compiled and given to the client. Apart from analysis of gathered data and financial goals of the client, this report also possesses the proposal of a specific plan along with its merits and demerits, so that the client can decide upon a plan of action by taking into consideration each and every point.     

Discuss an Appropriate Plan in Detail

The third step is another meeting between the financial consultant and the client where the report being submitted to the client is discussed in detail. The client can clear any of his doubts at this stage and can put up any questions too. The advisor, on the other hand, discusses the cost, benefits and implementation procedure of the plan that has to be agreed upon.  

Apply the Plan

Once the client agrees upon a particular retirement plan, it is now time for the advisor to help implement that plan. Your financial advisor will take care of everything that is needed for implementing the plan and will keep you updated on each stage of the process.

Analyze & Revise the Investment Plan

Even after the implementation of the financial plan, your financial advisor keeps on reviewing your investments because your financial situation never remain the same and keeps on changing over time. The financial expert takes care that his client is always on the right path to accomplish his ‘life after retirement’ goals as well as the financial goals.

According to Richard Cayne Meyer Asset management Ltd, the earlier you plan your retirement, the better it will be for you. So find out an expert financial advisor today and choose a suitable retirement plan so that you can enjoy a happy and content life into retirement.