The study revealed that 59 per cent of retail investors with a portfolio of over £200,000 are unlikely to invest in passive funds in the next six months, while over half said they were likely, or very likely, to invest in active funds.
In an article published by Trustnet earlier this month, it was revealed that during the financial crisis, FTSE All Share tracker funds were a better buy than actively managed funds that have the same index as their benchmark.
In the last five years the average actively managed fund outperformed the average tracker fund by only 0.3 per cent, despite a vastly higher average total expense ratio (TER).
Robert Churchlow, head of active equities at Legal & General said that he expected the result. He believes that actively managed funds are more suited to the unpredictable nature of the market at present.
He said: "Given the volatility of markets and the fact that economic cycles are likely to be shorter at the moment, it is understandable that investors are looking to actively managed funds for security over the next six months."
"Active fund managers have the resource to perform in-depth analysis in order to hedge out risk and select the strongest companies from any given sector."
Head of research at Hargreaves Lansdown Mark Dampier said that actively managed funds should make up the bulk of a portfolio no matter what the market conditions were. He said that the outperformance of 0.3 per cent was more impressive given the widely disparate quality of funds on offer.
"With so many poorly managed active funds out there, I think the fact that they [on average] still managed to outperform trackers is very commendable. The results will be heavily skewed by poorly performing fund managers. At the end of the day, it’s up to the investor to choose the right fund manager, so averages like this can’t be taken too seriously."
Financial Express data shows the huge range between the best and worst performing actively managed funds that use the FTSE All Share as their benchmark over a five year period. L&G UK Alpha delivered returns exceeding 109 per cent in that time, outperforming Gartmore UK Alpha by nearly 129 per cent, and its bench mark by 85.6 per cent.
Performance over 5-yrs
Source: Financial Express Analytics
He continued: "I'm not saying tracker funds shouldn’t be in a portfolio. If you’re massively concerned about risk and costs, then they are a viable option. But investors have to remember what they’re buying into. There is no way that they can outperform sector averages; in fact they many tend to underperform, especially in the long term."
Dampier believes that some tracker funds do not track the market as closely as they claim: "Many trackers in the Far East give you huge amounts of exposure to certain stocks. I’ve seen some that have up to and beyond 20 per cent in a single stock, which is obviously risky."
Kerry Nelson, managing director of Nexus Independent Financial Advisers said that she also favours active funds.
"It is the responsibility of the IFA to locate the better performing funds, and filter out the funds that bring down the average", she said.
"If you look at someone like Philip Gibbs, who went into cash when he needed to, and consistently outperforms his peer group, it’s clear that there are quality managers out there who can outperform in rising and falling markets."
Performance over 5-yrs vs peer group
Source: Financial Express Analytics
She added: "I think that this result of 59 per cent is very positive. There is a danger of apathy in the market place, as too many investors settle for mediocrity. Why should they do this when there is a scope for outperformance?"