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Why active funds underperform even when the manager picks well
The managers running the biggest active funds picked stocks that beat the market in 2025 — and most still lagged their benchmark. A Morningstar do-nothing experiment and a body of academic research explain why active funds underperform even when the picking is good: skilled buying undone by poor selling, the hidden cost of trading, and the incentives that keep managers churning. The UK evidence points the same way.
Robin Powell
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Why market narratives survive being proven wrong
When a false claim is corrected, we assume its influence disappears. New experimental evidence suggests that is true for numbers but not for stories: a debunked statistic leaves almost no trace, while a debunked story keeps shaping beliefs — and leaves people more confident, not less. This is what the finding means for the market narratives investors absorb every day, and why the beliefs held most firmly may deserve the most scrutiny.
TEBI
Jul 207 min read
Cognitive surrender: what AI is doing to investors' judgment
AI now sits beside roughly a third of British retail investors as they make money decisions. New research from Wharton, MIT and a Nobel laureate puts a number on what it's doing to their judgment: confidence rises by nearly 12 percentage points, even when the AI is wrong half the time. The researchers call it cognitive surrender — and the investors most prone to it are the ones least likely to notice.
Robin Powell
May 288 min read
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