STEPHEN CRANSTON: Baby boomer bulge will change investment targets and strategies
Unpredictable markets and misallocation of capital make it dangerous to blindly track indices
Most of us are reconciled to the introduction of index funds into the investment landscape. In SA they may account for less than 5% of equity assets, divided between unit trusts and exchange-traded funds but in the US they account for one-third of mutual fund assets and should make up half by 2020. So the new book The End of Indexing by Niels Jensen is certainly contrarian, much like those books in the late 1980s predicting the demise of Japan, which at the time had a substantially higher market capitalisation than the US. Jensen’s argument against index funds is not based on the premise that active managers will all start magically beating the index. Rather, he believes the investment environment will no longer be suited to index tracking. As chairman of Absolute Return Partners, Jensen is no fan of market following investment strategies. There are six structural mega-trends that will mean the end of the benign conditions for equities and bonds over the past 30 years. Sitting back ...
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