Asset Intelligence News

Passive investment research

Passive investment research

With RDR on the horizon, financial advisers will need to fully consider the merits of passive investments within their advice and portfolio construction process.

Both traditional index-linked funds and exchange traded products have been enjoying growing support in recent years and this has been characterised by fund inflows and a glut of new product and providers.

Products are also becoming increasingly sophisticated and there can be a number of complex factors to consider in their analysis (the exposures, diversification and financial strength of counterparties, the use and nature of swap agreements, taxation status, stock lending, sampling and so on).

Recent reports have also served to highlight the inherent risks of exchange-traded products, serving to remind advisers of the need to have in place a robust ETF selection process and a structured framework for the ongoing monitoring of performance:

  • Bank of International Settlements (Market structures and systemic risks of exchange-traded funds),
  • Financial Stability Board (Potential financial stability issues arising from recent trends in ETFs)
  • International Monetary Fund (Global Financial Stability Report April 2011, Annex 1.7: ETF Mechanics and Risks).

With RDR on the horizon, advisers will need to pay due consideration to passive investments within their investment advice and portfolio construction processes.

Our passive investment panels, accompanying research and process documentation provide a robust and rigorous documented selection process and a comprehensive solution for advisers. For more information, please contact us.


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