UK – Investors will “fair better in a tracker fund than by backing so called ‘experts’ when the market goes down,” according to a report by Virgin Money and the performance management firm WM Company.

Sixty per cent of active fund managers in the UK failed to beat the FTSE All Share Index in 2002, according to the survey, which also shows that in four of the five bear market years since 1990, active fund managers trailed the market.

Says Virgin Money director Gordon Maw: “The myth has persisted that a fund manager will give you better returns in a bear market, but we now know that tracker funds beat the majority of fund managers whichever direction the market is heading in.

“Tracker funds faced their first real test in the recent bear market conditions but the figures from the last three years show they have more than held their own compared to the problems fund managers are facing. Active managers can now no longer claim to be a viable option in a bear market,” he added.

The findings from the fifth annual WM study into active and passive unit trust returns, commissioned by Virgin Money, shows over the 14 years to the end of 2002, the average tracker trust outperformed 52% of active trusts.

Concluded Maw: “Tracker funds are low cost and beat most fund managers most of the time. They should therefore form the core of most investors’ portfolios.”