Passive Investing: The Evidence

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Passive Investing: The Evidence - full length film

November 30, 2012

106 comments

A remarkable 54 minute film featuring some of the world's top economists and academics and demonstrating:
- how the claims of active fund managers to be able to beat the market are largely a myth
- how costs are the biggest drag on performance - and why active costs more
- how passive investing offers the best experience for the vast majority of investors
- the benefits of a diversified portfolio in guaranteeing consistent returns
- why passive investing is better for your health
- why active investing has held sway for so many years....
- ... but why things may be changing
- and why passive is the rational, mathematically proven route to investing success.

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Comments

JohnG

This is not war and piece as there are no right and wrong answers. Perhaps we should just focus on probability that passive investors get better value for money than active investors in the long term. Both need to look at the performance of their investments over time and make adjustments and if you are happy with less effort cost and ret accept market returns then passive is a good answer. If you want higher fees, more sleepless nights and possible higher return then active might be for you, but don't forget that 95% of active funds do not beat passive and very few have been around for the term of an investment. pirucreek If you invest in a Mutually owned Company like Vanguard the investors are the shareholder and Jack Bogle does not have the wealth of some active fund manager CEO's

Carl Harverson

".....they wouldnt invest in themselves"? - factually incorrect. "Seed money" - the firms own money - is normallly used to launch funds. Most ETFs are designed to mimick what investment banks tell you to buy (the benchmark). Net of fees, you are buying GUARANTEED underperformance (BM less fees and tracking error). They also have no permission to avoid icebergs even if they are obvious. Thats not great value....

Peter Bradshaw

How passive is passive investing? Ay least they are honest they are pumping an industry. That of so called passive funds.

Peter Jevšenak

Passive and active management is like oak and fern. oak starts slowly and steady and can survive in shady, bushy fern in first few years, but in 20 or 30 years difference in height is clear.

Sarah Tran

like it...........

measterpool

There was much insightful information discussed here. At my company there is a 401k plan. The available funds have 5-10 year names to indicate maturity dates to guide the investor as to how much time before they reach retirement. I'm 55 yrs old, if I want to start to draw down from my account at 65 yrs old, than I would buy into the .....2025 named fund. The higher the number the more time before full retirement, also more volatile equities. Lower numbered funds have more bonds with less risk lower rate of returns. There is an available PCRA personal choice retirement account that allows more funds that can be invested into, limited to no more than 25% of total portfolio. PCRA account has restricted limited pool of funds, possible conflict of interest companies within those funds as restrictions. No individual equities, commodities are allowed to be traded, except the company I work for stock. Thanks for posting informative presentation.

Timothy Yonish

This is the best video on learning modern day portfolio management. Listen to what they're telling you. It's golden. My favorite one is "Nobody knows nothing." True if you think about it.

alnot01

Annual return, average over the past 10 years, on the Vanguard Admiral Fund indexed to S&P 500 8.1% 5 basis points Entire USA stock market: 8.6% 5 basis points European stock market: 6.8% 12 basis points American long term bonds: 7.0% 20 basis points This is the challenge Vanguard poses for the entire industry. Who can meet it?