Active vs Passive

The view of the AFM

Today the Netherlands Authority for the Financial Markets (AFM), which is responsible for supervising the operation of the financial markets in the Netherlands, published a study about active versus passive manage-ment and a guideline called: “Active and passive management in the interest of the client”. Their publications can be found at

Together with our Dutch ‘passive investing soul mates’, Brand New Day, Meesman, Think Capital and the Index People, we sent out a press release to comment on the AFM’s findings.

In it we note that the main conclusions of the AFM are encouraging. They state that it “is very hard for active fund managers to show persistently extraordinary results over the middle and long term” and “In practice it is hard to distinguish between luck and skill of a fund manager. Therefore selecting active funds in advance which, after costs, will show positive extraordinary results in the future, is very difficult.”

On the other hand we comment that we were disappointed with some of the wording the AFM used in the guideline, as it was a lot more ambiguous in its recommendations than the conclusions of their study warranted. All in all though, we feel this is a step in the right direction which will hopefully help in getting financial institutions and wealth managers to be more careful in their use of expensive funds that redirect the profits of companies towards the financial industry, instead of to the rightful recipients, namely the owners of those companies’ shares.

Kind regards and lots of investment peace of mind,

Marius and Jolmer