Passive funds have a clear philosophy based on market capitalisation and replicating the performance of indices or benchmarks. This is sometimes called “evidence-based” and seems often thought of as highly diversified - maybe largely because a large number of securities are held. But, the evidence currently suggests a passive equity fund might be giving people very significant exposure to a small number of stocks. As a proudly independent firm we asked W1M, a leading investment house - “Where is the evidence in diversification?”

Explore the latest investment insights from Nerson Pillay, Senior Investment Director at W1M.

There is currently quite a lot of comment using the word “bubble”. This is not surprising when stocks like Nvidia, Microsoft, Amazon and AMD have done incredibly well and have massive market capitalisations. In addition to “AI” excitement and concern, there is crypto perhaps seeking to become established as a sort of digital gold. Meanwhile, real gold has now outperformed US equities this century as investors seek safe havens and real assets in a long period of money printing undermining confidence in fiat currencies. And, perhaps quietly, Chinese equities, after a long stagnation, have started to reflect that country not just being a competitive manufacturer but a leading innovator. Are there bubbles? Will trade wars restart? What can we do about any of it? Do you insure your house?