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Dec 16 2012

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Passive Investing, The Evidence the Fund Management Industry Would Prefer You Not to See – A Documentary On Evidence Based Investing With Index Funds





Here’s a finely produced UK documentary on indexed investing. It may have been funded by a  financial service firm,  but it’s impressive.

(Or watch eight shorter parts below.)

 

Passive Investing, The Evidence the Fund Management Industry Would Prefer You Not to See

This  remarkable 54 minute film featuring some of the world’s top economists and academics demonstrates:

  • how it’s largely a myth that active fund managers can beat the market
  • 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
  • why passive is the rational, mathematically proven route to investing success.

 

For more information contact info@sensibleinvesting.tv
 © SensibleInvesting.tvVideo used with permission

 


 Or watch Passive Investing, The Evidence the Fund Management Industry Would Prefer You Not to See, in 8 parts:

  1. The Outperformance Myth (7:15)
  2. The Cost of Investing (6:18)
  3. A Better Alternative (8:05)
  4. Ultimate Diversification (8:44)
  5. A Healthier Way to Invest (7:04)
  6. Hooked On Active (6:02)
  7. The Tide Is Turning (6:48)
  8. The Rational Choice (8:08)








About the author

andrew hallam

I'm a freelance finance writer, lucky enough to have been nominated as a finalist for two Canadian National Publishing Awards. I'm also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, a book explaining how I became a millionaire on a teacher's salary, while still in my 30s. Working to empower people financially, I'm available to motivate and inspire people on basic retirement planning and index investing. I'm happy to comment on your questions, first, please read the Terms of Use.

Permanent link to this article: http://andrewhallam.com/2012/12/passive-investing-the-evidence-the-fund-management-industry-would-prefer-you-not-to-see-a-documentary-on-evidence-based-investing-with-index-funds/

11 comments

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  1. avatar
    woodes34

    Fantastic film Andrew. Thanks for sharing this. It really boils down the arguments for passive investing beautifully.

    1. avatar
      Andrew Hallam

      Thanks Woodes34!

      Hope all is well!

      Andrew

  2. avatar
    Jeremy

    Hi Andrew,

    I'm an avid reader of your blog and also a firm believer of index investing. Being Singaporean, I can certainly see how effective such an investment strategy can be in the context of a "typical" index. However, what about our Japanese friends who have had to deal with a "lost decade" (or two) on the Nikkei. Even with an allocation to an international index fund, if I had started work in 1990, I can't help but think that the overall portfolio returns would not have been very pretty with the Nikkei index (not that it would be any better with a mutual fund), in addition to having to deal with inflation.

    Any thoughts? Perhaps a way to determine if your country's index is overpriced and that you should assign a larger allocation to global/foreign indexes? I hope this hasn't already been asked. Thanks!

    1. avatar
      Andrew Hallam

      Hi Jeremy,

      To answer your question about Japan:

      Volatile markets are great to rebalance in, especially when you have a globalized portfolio of stocks and bonds.

      As a rebalancing investor, I am not concerned whether a market moves sideways for a decade or more. Take the U.S. market as an example. It has gone nowhere since the year 2000 (12 years) but anyone who rebalanced a portfolio and dollar cost averaged with stocks and bonds, international and domestic, would have done reasonably well. The same rule would apply to the Japanese investor who did the same with an international portfolio from 1990 to today. If they were disciplined, and rebalanced (to take advantage of the volatility) they would have done quite well. Unfortunately, most people prefer to buy rising asset classes–and this costs them plenty.

      We know that the U.S. markets are roughly where they were in 2000. Have a look at the assetbuilder website to see what the growth of wealth would have been by rebalancing a portfolio of different stock and bond indexes. You'll be surprised at the growth, despite the "lost decade" Check it out here: http://assetbuilder.com/growthofwealth/growth_of_

      1. avatar
        Jeremy

        Thanks, Andrew. That graph was very insightful and you were right – I'm astonished. I was expecting a re-balancing strategy to produce a slightly more favourable outcome but no where near the extent demonstrated. It is almost unbelievable how the portfolios fared against the S&P.

        If this doesn't convince everyone, I don't know what will.

        1. avatar
          andysterdam

          The link doesn't seem to be working.

          1. avatar
            Andrew Hallam

            Andysterdam,

            Thanks for letting me know. Oddly, it seems to work from this end. Can you open any of them?

            Thanks again for this info….it's strange, but has happened before with strange inconsistency.

            Andrew

          2. avatar
            Jeremy

            It works fine for me but I did share the link with someone else yesterday and he reported an issue too though I didn't think much of it then.

  3. avatar
    Walker

    What a treat! Jack Bogle, Rick Ferri, and Andrew Hallam all in one place. I have quotes from all three of you on my Investment Policy Statement to keep me on track and motivated to continue saving aggressively and investing.

    The self-discovery process that Rick describes at the end of segment 8 was an exciting experience for me. You learn more, read more, and all of a sudden the majestic simplicity of it all just slaps you in the face and you "get it."

  4. avatar
    My Own Advisor

    I watched this video last weekend and thought it was very well done.

    Although I continue to invest in many CDN and US dividend paying stocks, I firmly believe passive investing is the logical choice for most investors and consequently, I've got a good chunk of my RRSP invested this way too.

    You wonder if more videos like this should be done, but made much shorter for the majority of folks to pay attention to and learn from? I think 15 minutes for most folks would be great. Those that would want to spend the time, watching a 54-minute online production about indexing are already converted :)

    Mark

  5. avatar
    Stuart Gibbs

    Well done Andrew, great job as usual to get the word out.

    Thanks for sharing.

    Stuart

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