When you invest, you can either go active — paying a manager to pick shares and try to beat the market — or passive, where your money simply tracks the market through an index fund.
At Prospr, our default portfolio is a passive balanced fund, and there's a reason for that: most active managers don't outperform their benchmarks over time. According to Morningstar's Global Active/Passive Barometer, only a small minority of active global equity funds have managed to outperform comparable passive funds over the long term.
Consistently beating the market is extraordinarily difficult. Markets are highly competitive, information is widely available, and investment costs create a hurdle that active managers must overcome before they can add value. Even managers with strong track records often experience long periods of underperformance, making it difficult for investors to identify winners in advance and stay invested through inevitable periods of disappointment.
This doesn't mean active management has no place in a portfolio. Some managers do outperform over long periods, particularly in less efficient areas of the market where deep research, specialist expertise and disciplined investment processes can create an edge. The challenge is that identifying those managers ahead of time is far easier in hindsight than in real life.
For most investors, passive investing remains one of the most reliable ways to capture long-term market returns. By tracking an index, you participate in the performance of the broader market, and because passive funds typically charge significantly lower fees, more of the investment return stays in your pocket.
That's why Prospr's default SIPP RA portfolio uses passive funds as building blocks. It provides diversified exposure across multiple asset classes, keeps costs low, and removes the pressure of trying to predict which manager, sector or investment theme will outperform next. Your money starts working from day one, supported by a disciplined and evidence-based investment approach.
When you're ready, you can always build on that foundation by adding specific funds, ETFs or individual shares that reflect your own investment views. But for most long-term investors, the evidence remains compelling: broad diversification, low costs and time in the market are often more important than trying to beat the market.