There is a lot of arguments about active or passive investing. Which one is the best? From an investment philosophy point of view, at Bluewater, we take a passive investing approach. We don’t worry about fund managers leaving or a change of investment style. The fund just follows the index and adjusts itself based on preset criteria.
But is there much point in having an argument at all? How different are active funds from index funds anyway? I looked at the Vanguard Global Stock Index and compared it to active international equity funds offered by life companies. Aviva and Royal London only offer indexed global equity funds, so they are left out. Irish Life Investment Managers only have an indexed global equity fund too, so I looked at the Fidelity World Fund from their suite of funds. The funds are:
I haven’t put in the weighting for each of the top ten funds as some aren’t disclosed and New Ireland listed their top ten in alphabetical order 😁
There is not a massive difference. The top five companies in the MSCI World Index is represented in all the other funds. It is not until Meta Platforms (2% of the global index) that we start to see a divergence and Berkshire Hathaway (0.9% of the global index) is the only stock not held in the top ten of the active funds.
How do these funds match up? Going back to August 2022 (not very far. This is when the Fidelity fund was launched), we can see that the Zurich Life and New Ireland funds performed the best, followed by the index. The difference isn’t that great.
Some of these returns can be explained by the additional concentration of the stocks held. Zurich Life for example holds 460 different stocks and Fidelity holds just 79 stocks (New Ireland and Standard Life don’t disclose the total number held). Meanwhile the Vanguard Global Stock Index fund holds 1,334 different stocks, a much more diversified holding.
Next time you are trying to decide whether to go active or passive, remember that they more or less invest in the same assets. Look at the cost of running the fund and the level of diversification you are getting.
Steven Barrett
20 October 2025