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
Investors instinctively turn to past performance when choosing funds. But new Morningstar research on 6,003 European funds finds it is far more reliable as a warning sign than a buy signal.
Robin Powell
Jun 293 min read
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