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