Active and Passive Investing

Active and passive investing are often presented as an either/or choice. We don’t see it that way. In most portfolios, the best results come from combining both—using low-cost market exposure where it makes sense, and using carefully chosen active managers where experience and a repeatable process can add value over time.

Our starting point: we focus on the long-term mix

Before we decide whether to use active or passive, we start with the bigger driver of long-term results: the mix between growth assets (like shares) and income/defensive assets (like high‑quality bonds and cash). This mix largely determines how much a portfolio can rise and fall, and it’s the main lever that drives long‑term outcomes.

The “Core” part: broad market exposure where it’s most efficient

In large, well‑researched markets, a simple and low‑cost way to invest is often best. Index funds and ETFs provide broad diversification, clear pricing, and keep fees low. They also automatically keep exposure to the biggest companies as they grow.

The “Explore” part: selective active managers where they can add value

In other areas—especially where the market is less researched or more complex—some active managers can add value over time. We only use active managers when they have a proven, repeatable approach and strong controls. In plain terms, we look for managers who can (1) avoid overpaying, (2) spread risk sensibly, and (3) stick to their process through different market cycles.

Why Core & Explore works

This blended approach aims to give investors the best of both worlds: broad market participation where it’s sensible, and carefully selected active skill where it’s more likely to help—while keeping total costs down. It also helps avoid relying on one style of investing. When market leadership changes (as it often does), a mix of approaches can improve consistency.
We’ve seen this in action recently. Markets have been choppy, but diversified portfolios have generally held up better than headline moves in a single market. The goal is to retain capital in tougher periods and remain well positioned for an eventual upswing.

The All Weather Portfolio: built to help manage market downturns

Last year we launched the All Weather Portfolio after a period of very strong market performance, where prices in parts of the sharemarket appeared to be running ahead of underlying company profits. Some investors were concerned that valuations looked stretched and that returns could be harder to achieve if earnings didn’t keep up.
The All Weather Portfolio is designed for investors who want some exposure to growth, while also aiming to reduce downside when markets fall. It does this by blending shares with assets that can help in different conditions.
Portfolio mix:

The intent is straightforward: if sharemarkets come under pressure, high‑quality bonds can provide stability, and gold and infrastructure can add diversification. With geopolitical risks elevated and volatility higher at times, this kind of construction has proven useful. So far this year, the All Weather Portfolio has lived up to its name.

Bottom line

Active vs passive isn’t a contest—it’s a toolkit. Our job is to set the right long‑term mix for each investor, then build it using a Core & Explore approach: low‑cost market exposure where it’s most efficient, and proven active managers where they can add value—while keeping fees and tax drag under control.

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