Did Passive Investing Kill The Active Star? Hall of Famer David Pace on Why Low Cost Isn't What You Think It Is

Rob Pizzichetta, Founder of Mont Wealth, interviews David Pace, founder of Greencape (2006) and the first Melbourne inductee into the Funds Management Hall of Fame, about his career from KPMG to Merrill/BlackRock and the frustrations with bureaucracy that led him to build a boutique focused on investing, alignment, and culture, including outsourcing operations to Challenger and transparent profit sharing. Pace argues passive growth and benchmarking incentives (including APRA’s underperformance rule) drive risk aversion and large opportunity costs, making this a compelling time for quality active managers who can exploit widening gaps between price and fundamental value. He outlines what to look for in active managers (investment in research travel, performance fees, succession, and conviction), discusses the importance of strong investor relations, and reflects on Australia’s outlook and AI’s labor implications. He also shares his post-retirement activities in music, volunteering, and mentoring. 00:00 Hall of Fame Intro 01:22 Career Origins and KPMG 02:53 Why Greencape Started 04:39 Building Culture and Structure 08:10 Active Versus Passive Shift 12:38 Time Horizon and Performance Pressure 13:52 APRA Rules and Incentives 17:00 What Makes Great Active 19:47 Fees Inhouse and Marketing 22:03 Core Satellite Portfolios 23:02 Conviction Through Drawdowns 24:00 Investor Relations Matters 27:49 Shareholder Advocacy Role 29:15 Passive Versus Active Debate 30:31 Super Funds And MER Trap 33:33 Australia Outlook And AI 36:27 Passive Capital Misallocation 38:09 Bubbles And Valuation Hype 40:42 Life After Retirement 42:43 Final Thanks And Wrap