Featured and Latest Posts
Can Active Fund Managers Protect the Downside?
Active managers often claim that they earn their keep in downturns—sidestepping crashes, rotating into resilient sectors, or holding cash whilst passive investors suffer. But when we test that promise across the bear markets of 2000–2002, 2008, 2011, 2018, 2020 and 2022, the data tell a different story.
Using SPIVA scorecards and academic research from Cochrane, Blake, Barras and others, this post shows that active fund managers not only fail to protect on the downside—they often underperform more severely. Across US style boxes and global markets, the pattern is consistent: the ‘safe hands’ of active management rarely deliver when it matters most.
If you're relying on stockpickers for crisis protection, it may be time to rethink that strategy.
Passive vs Active Fund Management in Fixed Interest (Bonds)
Equity markets have long made the case for indexing. With liquid trading, broad coverage, and well-researched prices, passive equity strategies consistently outperform the majority of active managers—especially after costs. But fixed income is different.
Bond markets are more opaque, fragmented, and often distorted by central bank intervention. Index construction itself is flawed, overweighting the most indebted issuers rather than the most creditworthy. As a result, even evidence-led investors sometimes make an exception for active management in bonds.
In this post, we explore whether that exception is justified. We examine the structural differences between equity and bond markets, the empirical performance of active bond managers using SPIVA’s 2024 scorecard, and the emerging role of systematic strategies that bridge the gap between active and passive. As we’ll see, whilst there are reasons to question bond indices, the long-term data still challenge the promise of active alpha.
Value vs Growth Investing
Value or growth? It’s one of investing’s most enduring questions. Growth stocks like Apple and Nvidia promise future riches, whilst value stocks—often out-of-favour firms like Ford or BP—appear cheap today. History suggests that value has delivered higher long-term returns, but not without discomfort.
Some believe that the value premium reflects added risk; others see investor bias and overreaction. As John Cochrane jokes, everyone wants the higher returns of value stocks—until they find out which ones they’d actually have to buy. ‘There you go,’ he says, ‘that’s the value premium.’
Despite recent challenges, the case for value remains compelling—especially when valuation gaps are wide. Tools like Research Affiliates’ Asset Allocation Interactive, which I highly recommend, highlight its long-term potential.
What Do Systematic Fund Managers Actually Believe?
When it comes to systematic investing, the labels can be misleading. Index fund. Smart beta. Factor strategy. Quant active. These terms are often used interchangeably, but behind them lie profoundly different beliefs about how markets work—and how best to capture returns.
This post dives beneath the surface to explore the investment philosophies of seven major firms: Research Affiliates, AQR, Dimensional, Avantis, Vanguard, BlackRock, and State Street. Some believe markets are efficient and best owned passively. Others think anomalies exist—persistent patterns like value, momentum or low volatility—that can be systematically harvested.
Same data, same markets. But radically different interpretations.
If you’ve ever wondered why one firm tilts towards small-cap value, another reweights by fundamentals, and another just hugs the benchmark, this breakdown is for you.
Understanding these differences isn’t just academic—it shapes how portfolios are built, how returns are earned, and what risks investors take on along the way.
Good financial decisions aren’t about predicting the future—they’re about following a sound process today.
In investing, outcomes are noisy. Short-term performance often reflects randomness, not skill. Yet fund managers continue to pitch five-year track records as if they prove anything. They don’t.
As Ken French puts it, a five-year chart ‘tells you nothing’. The real skill lies in filtering out the noise—evaluating strategy, incentives, costs, and behavioural fit.
Don’t chase what worked recently. Stick with what works reliably.