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How much passive investing is too much?

Warnings that index funds have broken the stock market all imply a threshold: a share of the market at which price discovery fails. Nobody making the argument names it. Owen Lamont, writing in the Financial Analysts Journal, argues that no such number exists short of complete passive ownership, and that what actually determines whether prices stay informative is who is left doing the trading. His case, the strongest peer-reviewed research against it, and what the performance

Robin Powell

Fees are the most reliable predictor of future returns

The less you pay to invest, the better your future returns are likely to be. That’s the key finding of new research from Morningstar, as...

Robin Powell

Feb 7, 20253 min read

Has sports betting made fund managers less risk-averse?

The growth of sports betting and gambling in general is making fund managers more inclined to take risk, new research suggests

Robin Powell

Feb 3, 20254 min read

Should you buy cryptocurrencies?

Cryptocurrencies have surged in popularity, with millions of people across the globe now investing in them. Bitcoin, Ethereum and Binance...

Robin Powell

Feb 3, 20253 min read

The "purposeful inertia" that preserves the status quo in asset management

Why does asset management move at a snail's pace? A new book claims it's down to the "purposeful inertia" of entrenched interests.

Robin Powell

Jan 27, 20254 min read

It's not all about the biggest stocks

When people think about stock market investing, they tend to focus on the biggest stocks — Apple, Microsoft, Amazon and the like. But...

Robin Powell

Jan 27, 20253 min read

Two compelling reasons for indexing

Active fund managers use a range of arguments to justify their higher fees. But the evidence clearly points in a different direction....

Robin Powell

Jan 23, 20253 min read

Stop making predictions

The investing industry loves to make bold predictions. Financial commentators often appear in the media claiming to foresee market trends or economic turning points. But as history has shown, these forecasts are rarely accurate. While some patterns like increased volatility are more predictable, no one truly knows where the market is headed next. That’s why basing your investment decisions on short-term forecasts can do more harm than good. As Professor ELROY DIMSON explains,

Robin Powell

Jan 20, 20253 min read

Is the S&P 500 too concentrated?

If I had £1 for every time I read that index funds are too heavily concentrated in big US tech stocks I would be a very rich man. It is undeniably true. The FT recently reported that the top ten companies accounted for 37.3% of the S&P 500, which, by historical standards, is a very high proportion. Even more remarkably, just 26 stocks made up half the entire value of the index — the lowest number since at least 1980. Several market commentators have warned that rising levels

Robin Powell

Jan 17, 20255 min read

The FCA is risking a bigger scandal than Woodford

The fifth anniversary of the closure of the Woodford Equity Income Fund (WEIF) is two weeks away. More than 300,000 investors were affected by WEIF’s implosion. Some of them planned to retire by now but are still having to work to recoup the money they lost. Many died without receiving any compensation. You would hope by now the financial industry would have learned the lessons of this sorry saga. Alas I fear it hasn’t, and, five years on, the chance of a recurrence has never

Robin Powell

Jan 5, 20254 min read

Six changes to financial markets that transformed investing

The financial markets have changed beyond all recognition since the late 1960s and early 1970s. But many investment strategies haven't.

Robin Powell

Jan 2, 20256 min read

Should new UK investors use Vanguard Investor?

I’m one of Vanguard’s biggest fans, and I’ve used Vanguard Investor, its personal investing service for UK investors, for many years. As...

Robin Powell

Dec 24, 20242 min read

AI-driven strategies are giving amateur traders the runaround

Amateur traders have always faced an uphill battle to outperform the market, net of costs, over meaningful periods of time. But new...

Robin Powell

Dec 19, 20244 min read

What active funds and budget flights have in common

Yes, annual management fees for actively managed funds are far higher than they are for index funds. But it’s the linked costs of active funds that people don’t consider, and those can be even more significant. Anyone who uses so-called budget airlines will be familiar with what economists call linked costs, or junk fees as Americans tend to call them. Linked costs are secondary expenses that arise as a result of buying a primary product or service. So, for instance, you

Robin Powell

Dec 11, 20244 min read

Frequency of fees can be as important as the quantum

Regular TEBI readers will understand the need to avoid high fees. But new research suggests that the frequency of fees can be just as...

Robin Powell

Nov 27, 20244 min read

Indexing scare stories you shouldn't lose sleep over

We keep reading indexing scare stories. But there’s no evidence that investors need to worry about.

Robin Powell

Nov 19, 20245 min read

What financial advice and car repairs have in common

The reason why so many people receive poor financial advice is the same reason why so many of us overpay for car repairs. Simply put, we lack the basic knowledge to distinguish good advice from bad. A phrase we keep reading is the “advice gap”. And I get it. It’s a big problem I’ve written about many times. Only a tiny fraction of the UK population receives financial advice. The Retail Distribution Review, for all the good it has done, has only widened the gap further, as

Robin Powell

Nov 13, 20244 min read