George Boubouras, chief investment officer of the newly James...

George Boubouras, chief investment officer of the newly James Packer-backed Contango Asset Management, says that active strategies are proven to beat passive, but fund managers also need to recognise that passive is important to some investors who tend to focus on costs. It is a sentiment that even famed value investor Warren Buffett shares.

At Contango, bonuses have been scrapped for the key investment staff. Instead, they own equity in the business so that way, risk is linked to sustainable medium-term investment performance and remuneration. It is a more contemporary way to align all interests. (In Australia, nobody knows what fund managers get paid beyond the transparency around fees).


"Active adds value over the cycle and active has been proven over the past one, two and three years. Yes, there is a different cost equation," Mr Boubouras said.

"Then it comes down to how do you allocate the risk and how do you pay for it? Active works, but human nature is to favour low costs ahead of valuations. They focus too much on the known knowns of costs and in the end miss out on sustainable alpha over time."



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