Whenever you find yourself on the side of the majority, it is time to pause and reflect. – Mark Twain.
- The biggest market risk comes from money flows. Everything is good while more money is being invested, but withdrawals will create forced asset sales and another bear market.
- In the last 10 years, 27% of actively managed funds have outperformed the market, but you can increase your chances by choosing a third option.
In the everlasting debate between passive and active investing, passive investing is currently winning. More money is flowing into passive than actively invested funds, and many celebrate victory and the death of stock pickers. Stock market movements are influenced by money flows and if more money flows into passive funds, they will clearly outperform the competition.
In today’s article, we’ll take a look at what is going on in the world of actively and passively managed funds, and will discuss a third option. An option that’s cheaper and one where your returns don’t depend on money market flows all that much. More →