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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.
Are Bonds Really Safer? Rethinking the Role of Fixed Interest in Long-Term Portfolios
For decades, conventional wisdom has insisted that investors should reduce equity exposure as they age, replacing stocks with bonds to lower risk and secure retirement income. Bonds, after all, are supposed to be the ‘safe’ part of a portfolio—steady, predictable, and protective. But what if that story is not just outdated, but backwards?
A landmark 2025 study by Cederburg, Anarkulova and O’Doherty turns this advice on its head. Using return data from 39 developed countries over more than a century, the authors simulate one million retirement scenarios and reach a striking conclusion: an all-equity portfolio—33% domestic and 67% international stocks—not only delivers higher long-term returns, but also reduces the risk of running out of money in retirement compared to traditional stock-bond mixes. In other words, the asset class long considered the portfolio’s safety net may actually be making retirement less secure.
Yet bonds still have a role to play—not as financial optimisers, but as behavioural anchors. For many retirees, the psychological comfort of owning something stable can be the difference between staying the course and selling out at the worst possible time. The true challenge is not just building a portfolio that performs well on paper, but one that investors can live with when markets test their resolve.
DIY Investing vs Hiring a Financial Adviser: Who Comes Out Ahead?
DIY investing has never been easier. With low-cost index funds, digital platforms, and a wealth of financial content online, going it alone is now a real option. But just because you can manage your money yourself, does that mean you should?
Research suggests that investors who work with a financial adviser often end up better off—not because of superior fund picking, but because advisers provide structure, planning, and behavioural discipline. Studies show that advised households accumulate significantly more wealth over time, with UK data from the International Longevity Centre showing gains of over £40,000 in total assets for those who took advice.
This post explores the real value of financial advice: from detailed lifetime cash flow modelling and tax optimisation, to helping clients avoid poor decisions during market turmoil. The goal isn’t outperformance—it’s clarity, confidence, and long-term alignment.
High Yields, Hidden Risks: Why Structured Products Favour the Seller
Structured products promise the best of both worlds: stock market upside with limited downside. It’s a compelling pitch, especially in uncertain markets. But beneath the glossy brochures and bespoke payoffs lies a very different story—one where complexity conceals cost, and the bank always wins. These instruments are engineered using a mix of bonds and derivatives, allowing issuers to extract profit through hidden margins and asymmetric risk. Investors are often unknowingly writing options, capping their upside whilst absorbing significant downside risk. As multiple studies show, the expected returns on structured notes are frequently negative once fees and structural constraints are accounted for. For most retail investors, the allure of structured products is an expensive mirage—cleverly designed to benefit the issuer far more than the investor.
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.