A seven-minute watch. 

In this interview, Dan Brocklebank, head of UK at Orbis, suggests to me the industry should welcome the rise of passive investing, which offers average market returns at a negligible cost, while outlining a different way for active managers to be paid. 

Dan talks of passive as “a credible alternative, which has focused people’s minds on what they are paying and what they are getting”.

He asks: “If you can get the average returns basically for free, why go to the trouble and expense of finding and hiring an active manager?”

As outlined in last week’s 3 Questions, Orbis adopts a performance fee approach whereby its fund managers will only be paid if they outperform the market. Dan talks more about this model, while suggesting that the time is up for “active funds that charge active fees but aren’t very active”.

He adds: “For true active managers [passives] will shine a light on the value that skilled ones are able to deliver over time. By focusing on value for money it will show why the linking results to performance delivered by the manager can be very powerful.”