In the past few years, the financial world has witnessed an undeniable shift: the relentless rise of passive investing. As Terry Smith pointed out at the latest Fundsmith Annual Meeting, more than 50% of global assets under management now reside in so-called passive funds—index funds and ETFs. This phenomenon is … Read More
Terry Smith: Passive Investing: The Self-Reinforcing Momentum Strategy
In his latest letter to shareholders, Terry Smith explained why passive funds are effectively momentum strategies that create a self-reinforcing cycle, driving up large-cap stocks. In late 2023, passive investments via index funds surpassed active funds in Assets Under Management (AUM), now exceeding 50%. During the Dotcom boom, only 10% … Read More