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
Theodore Sturgeon argued that the surviving tenth of any field is worth finding. New data from S&P Dow Jones Indices tests whether that holds for UK funds. Of the 80 sterling-denominated UK equity funds in the top quartile at the end of 2021, three were still there four years later. Over two non-overlapping five-year periods, funds starting in the third quartile reached the top far more often than funds already there held their place.
TEBI
Aug 106 min read
SUBSCRIBE
Simply provide your email address to receive our regular update.
