e are active fund managers. This means that the funds we run are not constrained by any requirement to match or mimic stock market indices.

The 'active versus passive' debate has attracted much academic head-scratching. Passive management drew its strength from studies suggesting that investing in a portfolio of index constituents was more effective than using a fund manager to evaluate stocks according to their merits.

This extreme view held sway for a considerable time, not least because the facts appeared to support it. Passive investment creates a self-fulfilling spiral of inflating valuations amongst the main index constituents. Inclusion in the index alone justifies investment, with no account taken of valuation or of technical issues, such as the presence of multinationals and restricted free floats.

A passive fund will, by definition, track its benchmark index. While the index rises, distortions are easily overlooked. The corollary is less palatable. Were the index to fall by 25%, losing up to 25% of your money would be deemed satisfactory.

This is not our approach. Our aim is to protect and grow the wealth of all our clients by generating a return that is 'absolutely' satisfactory.