Choosing a smart passive investment is an active investment decision, because you are positioning your investment to benefit from market drivers, Candice Paine of Sanlam Investments, says.
She says you need to understand what you are investing in and how the investment is likely to perform, and then to stay invested through the market’s ups and downs.
Nerina Visser of Nedbank Capital says although now may not be a good time to buy into an index-tracking investment exposed to a market-weighted index, you should consider the costs of switching to another investment before you sell out of an investment that tracks a market-weighted index.
Visser says that if your index-tracking investment suffers in a market fall, you should consider buying more of the index while it is cheap and wait for the benefit that will come from a recovery.
Visser says you could also consider staying invested in a market-weighted index-tracking investment but stopping any contributions to it and instead diverting them to a safer index-tracking investment, such as Grindrod’s Low Volatility ETF.