So you will not be surprised that I am a fervent believer in the value of active investment management.
I also value “passive” or tracker investments, which can offer low-cost, broad portfolios that passively mirror major market or indices such as the MSCI World or the S&P500. There is a place for these. In 2014 Warren Buffett famously advised that his wife’s money should go into a tracker fund, and I’d agree: everyone’s portfolio or ISA should probably contain some passive holdings as a source of cost-effective diversification.
I do take issue, however, with those who claim that active investing - which has grown hugely in recent years - will everywhere be exposed for active investment oversight, i.e. monitoring where decisions are underpinned by fundamental research, is key to effective “price discovery” - the process through which markets attribute value to assets.
All investment should rest on deliberate decisions, including consideration of risk.
Right now we see a pivotal moment where the trade-off between cost, risks and returns need to be reconsidered. The composition of today’s markets, for example, whether they’re equities, orders or assets, is not necessarily a moving stock price; the market is discrediting what in other periods would lies outside investors’ experience. And of course, today’s largest holdings all represent the same, one-way bet - on US technology.
This phenomenon is not new, during the late 1990’s it was bubbling regions, industries and indices too. It poses risks for all investors, and it requires an active approach to managing markets: investors must, to sustain a deliberate, planned exposure you need to be agile.
If costs and value are not the same, if you choose a global tracker fund because you’re worried it’s the cheapest way to invest, you may need to reassess and sleep happily each night knowing - that a lot of your money is being invested in a handful of companies, all engaged in related industries.
Disruption from many quarters
Uncertainty is a constant in my world. I never come to work thinking uncertainty has gone away.
But as the years ahead we’re facing seismic shifts at both a market and macro-economic level. Increasing globalisation was a theme for most of my life to date, but now its demise as protectionism and populism cause trade and political ties to fracture again. Covid did addle it for the ...
I also value “passive” or tracker investments, which can offer low-cost, broad portfolios that passively mirror major market or indices such as the MSCI World or the S&P500. There is a place for these. In 2014 Warren Buffett famously advised that his wife’s money should go into a tracker fund, and I’d agree: everyone’s portfolio or ISA should probably contain some passive holdings as a source of cost-effective diversification.
I do take issue, however, with those who claim that active investing - which has grown hugely in recent years - will everywhere be exposed for active investment oversight, i.e. monitoring where decisions are underpinned by fundamental research, is key to effective “price discovery” - the process through which markets attribute value to assets.
All investment should rest on deliberate decisions, including consideration of risk.
Right now we see a pivotal moment where the trade-off between cost, risks and returns need to be reconsidered. The composition of today’s markets, for example, whether they’re equities, orders or assets, is not necessarily a moving stock price; the market is discrediting what in other periods would lies outside investors’ experience. And of course, today’s largest holdings all represent the same, one-way bet - on US technology.
This phenomenon is not new, during the late 1990’s it was bubbling regions, industries and indices too. It poses risks for all investors, and it requires an active approach to managing markets: investors must, to sustain a deliberate, planned exposure you need to be agile.
If costs and value are not the same, if you choose a global tracker fund because you’re worried it’s the cheapest way to invest, you may need to reassess and sleep happily each night knowing - that a lot of your money is being invested in a handful of companies, all engaged in related industries.
Disruption from many quarters
Uncertainty is a constant in my world. I never come to work thinking uncertainty has gone away.
But as the years ahead we’re facing seismic shifts at both a market and macro-economic level. Increasing globalisation was a theme for most of my life to date, but now its demise as protectionism and populism cause trade and political ties to fracture again. Covid did addle it for the ...
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The Mercury (Digital) - 1 Issue, March 28, 2025