Tactical trackers

There has been a clear shift towards trackers as many investors question whether active fund charges are justified. Too many are paying premium fees without getting premium returns. Some clients are reluctant to move entirely into traditional tracker funds. They want the low costs of passive investing, but with some active decision-making when market conditions change. That is where we are seeing growing demand for tactical asset allocation trackers. They combine passive efficiency with the flexibility to adjust allocations between regions, sectors and asset classes without the higher costs often associated with active management. For example, during a UK Prime Minister leadership challenge creating economic uncertainty, they can trim UK exposure and increase allocations elsewhere. A traditional tracker simply follows its index regardless. Many of these funds can form part, or even all, of a portfolio and are used by clients building pension wealth as well as those in retirement.

Clients are becoming more open to active management as market volatility rises. There is still strong demand for low-cost investing, but clients increasingly want managers who can make sensible adjustments rather than simply track markets through every shock. Active funds and tactical tracker strategies can both play a role, provided they are used carefully and costs are justified. They should sit within a diversified portfolio, not dominate it. Their value is in giving clients some flexibility when markets are moving quickly, while keeping a clear long-term plan in place. There is interest across age groups, though the reasons differ: younger clients want efficient growth, while older clients tend to be more focused on managing risk and avoiding unnecessary bumps.