Topic Guide

• Why should I invest? / How much can I expect to make from investing?
  • • Risk
    • Time
    • Fees
• Should I save or invest?
• How much do I need to start investing?
• Am I ready to invest?
• What can I invest in?
• How do I invest?
• Why you need an Investment Policy Statement
• How to create an Investment Policy Statement
• Is now a good time to invest?
  • • I’m worried about [insert geopolitical event]. Should I wait before investing?
    • The market looks expensive. Should I wait for a selloff before investing?
    • What if I invest right before a market crash?
    • Cash cocaine
    • Problems with the “X best days” argument
• Should I invest all at once or drip feed?
• What is diversification and why do I need it?
  • • Why is diversification so important?
    • How diversified is the FTSE 100?
    • Against international diversification
    • International diversification: The evidence – Part 1
    • International diversification: The evidence – Part 2
    • International diversification: The evidence – Part 3
    • Why nobody likes diversification
• The market is crashing, what should I do?
• Why do stocks go up?
• Is investing gambling?
• Is investing a zero-sum game?
• Beware graphs bearing outperformance
• The predictive power of fees
• When should I sell my investment?
• How much of my salary should I be investing?

• Equity funds
  • • The best Vanguard equity funds
    • Is dividend investing a good strategy?
    • Equity funds – to hedge or not to hedge?
• Bond funds
  • • The best Vanguard bond funds
    • How to predict bond returns
    • Is the stock/bond correlation about to turn positive?
    • Have bonds ever failed?
    • All about inflation-linked bonds
    • Why you should own inflation-linked bonds
    • Why you shouldn’t own inflation-linked bonds
    • Should you own inflation-linked bonds?
    • Duration matching: an introduction
      • • Why you should own long-term bonds
        • Duration matching in practice
        • Against duration matching
        • Should you use duration matching?
    • Should you invest in corporate bonds?
    • Bonds vs bond funds
    • Bonds – to hedge or not to hedge?
• Other asset classes
  • • What’s the best crash protection for your portfolio?
    • Should you invest in gold?
    • Should you invest in a concentrated fund?
    • Against thematic funds
    • Against hedge funds
    • Against other alternatives
• General
  • • What if my broker goes bust?
    • What is the rebalancing bonus?
    • How often should you rebalance your portfolio?
    • Size matters: how small is too small? (for an asset class)
    • Index funds vs ETFs

Introduction

• Active vs passive – what’s in a name?
• Can anyone be truly passive? In search of the Global Market Portfolio

Active vs passive performance – the evidence

• USA
• UK
• Europe
• Japan
• Emerging markets
• Real Estate
• Bonds

Arguments for active management

• What is factor investing?
  • • Why do factors outperform?
    • Multifactor investing – part 1
    • Multifactor investing – part 2
• Valuations vs long term returns
• Risk parity
• Irrational markets
• You’re not human

Arguments for passive management

• Performance
  • • Active vs passive performance: The evidence
    • Performance persistence
• Why do passives outperform?
  • • In theory: Sharpe’s Arithmetic of Active Management
    • In practice: The predictive power of fees
    • The market is efficient
    • The market is becoming more efficient
    • Positive skew
    • Requires no forecasting
    • Has no minimum investment requirements
    • Has no capacity constraints (no style drift)
    • Doesn’t require picking winning fund managers in advance (luck vs skill)
    • Doesn’t require deciding whether to stick with underperforming managers, and has no temptation to chase the latest hot manager (lower behaviour gap)
    • Doesn’t incur the risk of a manager having to close/suspend/merge their fund (survivorship bias)
    • Has fewer conflicts of interest
    • Becomes more powerful the more people adopt it
• Other benefits of passive
  • • Transparency
    • Simplicity
    • Takes less time to monitor
    • Less stressful, fewer decisions required
    • ‘Beating the market’ is not a financial goal
• Problems with smart beta
  • • Part 1: The cyclicality of factors
    • Part 2: Defining a factor is hard
    • Part 3: Factors can change
    • Part 4: Factor decay
    • Part 5: It’s impossible to know when a factor stops working
    • Part 6: Factor dilution
    • Part 7: Academia is not real life
      • • 7.1: Factors are long/short
        • 7.2: Factors work better in small caps
        • 7.3: Trading costs
        • 7.4: The human factors
        • 7.5: Some examples
    • Part 8: Backtesting
• Valuations and timing the market
• Closet indexing and herding
• Peer group rankings
• Self-selecting benchmarks
• The uselessness of forecasting
• Focus on things you can control
• Asset allocation drives most of your returns