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Sensible Investing

What do we mean by 'sensible investing'?

 

Sensible Investing is all about passive and evidence-based investing, which seek to capture the returns offered by the markets.

This is achieved by a pre-determined strategy which focuses on:

  • Keeping costs low by avoiding unnecessary trading;
  • Diversifying across the whole market and a wide set of asset classes; 
  • Taking the long term view - markets can do better in some years and worse in others, but passive investors understand that markets are efficient and operate on the basis of all known information. Research shows that it is extremely difficult to beat the market consistently, year on year.
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Isn't this just Indexing - simply following the shares in any given index, such as the FTSE 100 or the S&P 500?

Well, partly; but evidence-based investing - as the name implies - is an approach based on evidence rather than luck (or skill, as some fund managers like to call it); and incorporates not only traditional indexing, but also asset-class investing drawing on the latest academic research.

Our series on Smart Beta is a good example of how investing theory has developed, and continues to evolve.