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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
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Portfolio insurance: the crash protection that rarely pays out
Buying put options to insure a portfolio against a market crash feels like the prudent thing to do. But new research covering more than two centuries of market history finds that portfolio insurance loses money over time — and that it fails in exactly the slow, grinding bear markets that do investors the most harm. People insure almost everything they value. Homes, cars, phones, even pets: paying a modest premium to guard against a loss you would rather not face is one of the
Robin Powell
Jul 107 min read
Buffer ETFs: protection, illusion or expensive reassurance?
Buffer ETFs are designed to limit stock market losses over a set period, usually in exchange for capping potential gains. Now becoming available to UK investors, these downside protection ETFs use options to cushion falls in markets such as the S&P five hundred. This article explains how buffer ETFs work, what they cost, and whether the trade-offs are worth it for long-term investors.
Robin Powell
Jan 145 min read
Do active funds in downturns really protect you? What 26 years of data reveals
Active fund managers claim they earn their fees when markets fall. New Morningstar research spanning 26 years tests this claim. The findings: active funds in downturns do outperform more often, but markets rise 80% of the time, swamping any advantage. When COVID and 2022 stress-tested the theory, most active managers failed to protect investors. The promised shelter turns out to be little more than a coin flip.
Robin Powell
Nov 10, 20257 min read
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