The debate over whether an investor is better off selecting an active or a passive investment is still very much alive. It is particularly pertinent in these highly volatile times, with markets swinging up and down like a yoyo.

A good active fund manager can often be prepared for market disruptions through the considered positioning of their portfolio, or at least react quickly when they occur. In contrast, passive investors must blindly follow the market up or down.

The global transition to a low carbon economy has rapidly moved up the political and social agenda in recent years, creating a huge investment opportunity.

Alongside the need for reducing emissions, there is a simultaneous drive to make more efficient use of existing energy supplies and a growing number of companies are profiting from the provision of services and technology for these rapidly developing areas.

To understand why costs matter so much, it's worth returning to some fundamental truths of investing. The eventual net return on a given investment is made up of the gross return on the investment, less any taxes and charges.

The long-term impact of charges can be substantial. To really illustrate what that means, let's take an example, assuming neutral growth so that the full effects of charges can be seen clearly. In our example one product has a 2% annual charge, the other has 0.25%.

The number of investment houses offering 'passive' investment vehicles, also known as index-tracking funds, has grown substantially over the last decade. Once seen more as novelties, the benefits of these funds has become clearer particularly for private investors, who may be less willing to pay the fees charged on active management. Here, we will examine these advantages and assess whether passive investment is a viable option, particularly amid today's volatile markets. First, however, we will take a brief look at what distinguishes passive investing from its active counterpart.

The pure definition of an index tracking strategy is to create a portfolio which mirrors the performance of a specified index. There are, however, many different ways in which this can be done, all of which impact the returns investors receive.

In the UK we often refer to passively managed funds uniformly as 'trackers' but there are numerous types which follow various indices, employing different strategies, each with varying elements that impact their ultimate performance.

As a growing number of new players enter the passive market and the number of funds being launched escalates, TCF Investment provides 10 questions advisers and planners should consider when looking to invest in an ETF or index fund

1. What is the fund benchmark / index?

An obvious question, but the starting point to any due diligence. In order to ensure the fund meets their investment goal and matches their risk profile.

Background

An investor investing £100,000 in the average UK Equity mutual fund will generate the following fees over 20 years:

IFAs are a disparate lot. 'Herding cats' is a phrase that gets used, which I would accept as a compliment. After all, clients are all different, so why not their IFAs?

One area where these differences emerge is in Investment Strategies and the 'debate' between 'Passive' and 'Active' approaches can sometimes feel like conversations between two different religious sects.

It was Gandhi who demonstrated the power and effectiveness of passive protesting. The active demonstrations and protests may have had all the noise and action, but all too often didn't seem to achieve their goals. Perversely is it not the same with investment?