It has, in many ways, been a week of reflection here on the editorial team. 
It was with great sadness this morning we heard that Martin Gray, the ex-Miton manager and co-founder of Coram Asset Management, passed away after a short battle with cancer.
Gray (pictured) was one of the most experienced multi-asset managers in the business, delivering superior outperformance over the longer term due to his focus on value and downside protection.
Performance of fund versus sector and index under Martin Gray
Source: FE Analytics
Unfortunately, he came under increased criticism during his final few years as manager of CF Miton Special Situations fund (among others) due his highly defensive positioning meant he missed out on potential upside.
Nevertheless, and all biases aside, he was one of our favourite managers to speak to and a man we had a good relationship with. Very approachable, knowledgeable and articulate, he will be missed and our thoughts are with his family and friends.
It has also been senior reporter Daniel Lanyon’s final week with us as he has left FE Trustnet to take on the role of editor at another publication.
Dan, with his relaxed writing style and eye for a story, has been a pleasure to work with over the past two or so years and we wish him all the best.
Anyway, as per tradition, here the FE Trustnet team highlight its favourite articles of the past seven days.
TOBAM: The most “toxic” misconceptions about passives in the industry
At the start of the week, reporter Lauren Mason spoke to TOBAM’s Yves Choueifaty, who believes that passive management is the “biggest oxymoron” in the investment world, given that the managers have no control over position weightings.
The active versus passive debate is nothing new to investors – while those in favour of passive vehicles argue that they are far cheaper and less exposed to human error, others point out that active managers can avoid value traps and generate higher returns than the benchmark.
Choueifaty, however, believes that passive investing is nothing more than a gamble as opposed to a calculated risk and that, despite the lower charges, do not offer good value for money.
“An industry cannot be sustainably run on something that doesn’t make sense and it simply doesn’t make sense to replicate the market cap within the index,” he said.
“At the end of any bubble, whatever is becoming popular will always eventually burst. Saying that asset management should be run passively denies any future for capitalism.”
The article has certainly divided opinion among our commenters. Click through to join the debate.
The best UK funds for recovering their losses
Next up is a data-focused article by news editor Alex Paget, who took a closer look at the best UK funds at recovering their losses.
In order to do this, Paget used the recovery period metric – which shows the amount of time (in months) a fund takes to make a positive return following its biggest ever fall – on funds within the IA UK All Companies, IA UK Equity Income and IA UK Smaller Companies sectors.
According to FE Analytics, SVM UK Growth – which is £140.6m in size and headed-up by Colin McLean and FE Alpha Manager Margaret Lawson – has been the best fund for recovering the loss over the past decade.
Funds’ recovery periods, maximum drawdowns and total returns over 10yrs
Source: FE Analytics
The fund’s recovery period stands at just 22 months as even though its maximum drawdown period started in May 2008 and ended in February 2009, it was back in the black by March 2010 thanks to a 53.82 per cent gain following the depths of the global financial crisis.
Other funds to feature on the list (thanks to the fact they have had recovery periods of less than 30 months) include JOHCM UK Opportunities, Jupiter UK Special Situations and Barclays UK Opportunities.
Should investors be focusing more on the Sortino ratio in this volatile environment?
This week, editor Gary Jackson covered the views of Columbia Threadneedle global chief investment officer Colin Moore, who argued that volatility is likely to be higher in markets over the coming 10 years than they have been in the recent past.
In light of this, he thinks investors should embrace a wider range of metrics when building their portfolios, in order to estimate how their assets will perform in more turbulent conditions.
“I believe average volatility will be higher over the next 10 years than the last 10 years and episodic spikes will increase in frequency because sustainable economic growth will be structurally lower and geopolitical risk higher than any time since World War II,” he said.
“Diversification is meant to protect investors against volatility, but what’s the point of owning lots of investments if the volatility bogeyman has not been properly estimated? The Sortino ratio, which differentiates spike volatility from general volatility, needs to be used more.
The Sortino ratio was developed in 1983 and is a modification of the Sharpe ratio and differentiates ‘bad’ volatility from general volatility by taking into account the standard deviation of negative asset returns, or downside deviation.
FE Trustnet will be using the metric for the basis of new series, starting next week.
