Active vs passive

Concentrating on active share

Earlier in my career I used to be involved in the management of a concentrated equity fund. Part of which entailed selling it to potential clients. Luckily my job wasn’t so much the selling, which was a good thing because I’m a terrible salesman. I was there to answer any of the more technical questions […]

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Are large stocks getting larger?

This is the sixth part in a series examining the evidence behind the claim that passive investing is causing a bubble. For the previous part, on whether passive investing is making the market more concentrated, click here. — Looking at the behaviour of the largest stocks in the world can offer us some interesting insights

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Passive investing and market crashes

This is the fourth part in a series examining the evidence behind the claim that passive investing is causing a bubble. For the previous part, on whether passive investing is setting prices, click here. — Let’s assume for a moment that there is a relationship between indexing and market crashes. Indexing, for whatever reasons, increases

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Is passive investing causing a bubble?

Is passive investing really worse than Marxism? Is it creating a ‘frightening risk for markets’? Or are the concerns around passive investing nothing more than trumped-up fearmongering? This series begins by examining one of the most fear-inducing (and therefore one of the most persuasive) claims thrown at passive investing – that the rise of passive

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Problems with smart beta – part 5: It’s impossible to know when a factor stops working

This is the fifth post in a series discussing some of the problems associated with investing in “smart beta” strategies. For the previous post on how factors can decay after they become widely known, click here. We saw in a previous post that factors in the US have been providing pretty torrid returns since 2003.

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Problems with smart beta

Before ESG investing came along, “smart beta” was the next big thing. Smart beta strategies involve an investor tracking an index, much like traditional index investing. Where smart beta differs from index investing is in the composition of the index being tracked. Smart beta strategies track indices which have been weighted in some other way

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