By Tom Bradley
Canadian Couch Potato posted an interesting blog yesterday. Dan Bortolotti, the author of this highly-rated blog (in a recent Globe and Mail contest, it was voted the best investing blog in Canada), thinks we need to stop fighting about which is better – active management or indexing – and move on to more important matters. He starts by saying that, “the active v. passive debate is too often a distraction from what’s really important in personal finance.”
In this context, Dan discusses my book (It’s not Rocket Science – Plain-English Advice for Managing Your Investments) in some depth. He admits to being surprised that he found himself agreeing with 95% of what is in the book, despite the fact that he is strongly in favour of indexing and I’m an active manager. I presume that the 5% relates mostly to our different investment philosophies.
I couldn’t agree more with Dan on his main point. Investors, managers and commentators get too entrenched on active versus passive and lose sight of the bigger investing issues (Note: the same could be said for the scuffles around mutual funds versus ETFs). Dan sums it up by saying, “The fact is, if Canadian investors are suffering from chronic underperformance, it isn’t because their portfolios are actively managed per se. The problem is that most investors pay too much for active management, largely because the fund industry is driven by commissioned salespeople. Disciplined, patient and courageous investors can do just fine if they stick to low-cost, prudently run active funds ...”