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
A major Morningstar study of more than 5,800 funds has delivered a clear verdict on concentrated funds: they charge higher fees, deliver lower returns, and suffer deeper losses than their more diversified peers. The evidence suggests most investors would be better off on the main road.
Robin Powell
Feb 238 min read
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