Home bias—the tendency to favour domestic assets—is one of the most persistent patterns in investor behaviour. For UK investors, that means holding more in UK equities, gilts, property and sterling assets than global market capitalisation would suggest. And whilst much of this is driven by familiarity or inertia, a blanket rejection of UK exposure may go too far.

This post examines the case for a modest UK overweight, exploring five rational reasons why some home bias may actually be optimal. From currency matching and tax efficiency to relative valuations and implementation simplicity, there are good reasons for UK investors to hold 15–25% of their equity allocation at home—deliberately, not by default.

Factor investing promises a scientific edge—systematic returns from tilting towards characteristics like value, size, or momentum. But that promise is under review. Economist Andrew Chen, co-creator of the Open Source Asset Pricing project, casts doubt on the viability of many factors, especially for retail investors.

Chen argues that much of the language around ‘factors’ is imprecise. Many so-called factors are merely statistical predictors, not true sources of systematic return. Even when predictors are statistically sound, their effectiveness often fades after publication—and real-world trading costs can erase any remaining edge.

The takeaway? Whilst a small number of robust, low-cost, multi-factor strategies—like those from Dimensional, AQR, or Vanguard—may still offer modest rewards, the broader field of factor investing appears less fertile than it once seemed. For most investors, the global market index remains a formidable benchmark.

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.

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.