A Passive Excuse for Investing

You have to laugh.

There’s this fella who goes on and on about passive trackers, which literally track a broad market index (or part of one), moving up and down with the market and charging you for the ride.

And he thinks they’re unbeatable.

But he ignores the evidence that some fund managers beat them consistently, despite their higher charges (spent on research, not market playground rides).

Then he goes quiet on the comparison between Vanguard’s UK tracker since its launch, and how it’s been trounced by Invesco Perp (IP) High Inc

As I wrote recently inMarket Bird Watching: The Black Swan Diaries:

The Performance:

·         IP High Inc:   100.69%

·         Vanguard FTSE UK:  55.20%

The Risk (annualised volatility)

·         IP High Inc:  10.84

·         Vanguard: 14.82

Hmmm…better performance with less risk…

That sounds like a good thing.

So what does he do next?

He posts a piece that says in order to beat trackers some managers appear to not be playing by the rules…like investing in Value stocks or Small Caps!

Shock flipping horror!

How dare folks buy cheap in order to sell high (Nasty active value managers).

Shame on you. Imagine working out ways to beat an average by spending time and money on research to create results.

For more Investor Points of Few

“Bird Watching for Black Swans”

“How the Market Responds to Crises”

“Risk-Averse, Meet Mr Market…”

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