The Smart Way to Invest in Active Funds: Merryn Somerset Webb

Imagine you own a global exchange traded fund. You think you are passively exposed to the global stock market, but the truth is you are only exposed to a small fraction — big companies that have done well and are now expensive. You are effectively long momentum and short value.

That might be what you want. If it isn’t, you will need to shift some money into active funds, with real people making real stock picking decisions about potential future winners.

That might feel brave, given the reams of research showing active funds as a whole regularly underperform any index you choose to ...