Bringing you live news and features since 2006 

Index funds and ETFs are past their sell by date author claims


Gervais Williams, managing director of Miton Group, has published a new book, ‘The Retreat of Globalisation’ warning: “Index funds have passed their sell-by date. Expect more change in the markets in the next three years than in the last thirty.”

After Brexit and the election of Trump, the financial world is entering a momentous period of adjustment, Williams says.

“To date government and central bank stimuli may have boosted market valuations, but at the expense of distorting the corporate landscape. The ongoing deferral of corporate renewal has left the world economy drifting into stagnancy.”

Williams argues that it’s the electorate who have chosen to invoke political change to break the cycle. This will initiate a radical transition in economic policy, and market trends, which demands an equally radical change in investment strategies.

“Corporately this involves a period of renewed challenge, when the financially fragile and commercially overstretched will be further tested. Already share prices are diverging more than usual following the Trump success. Get used to it. In future 100 per cent of stocks in portfolios will need to be well positioned to generate a return. Actively limiting the downside risk within portfolios will become just as important as finding those offering potentially attractive returns.
“Index funds, ETFs and all other passive strategies have passed their sell-by date. This just isn’t the time to invest in funds with no conviction in their 8 per cent holdings,” says Williams.

The book outlines some of the metrics that will define success going forward. In particular Williams suggests that prioritising individual stocks that are investing for productivity improvement, and those which offer outstanding service levels, will outperform disproportionately in future.   
Readers of ‘The Retreat of Globalisation’ will be alerted to the contrast between the long period of stability of asset allocation preferences over the last 30 years, relative to the scale of change now coming through.

The book highlights the dangers of sitting back with a status quo portfolio when changing market trends could undermine future returns and seeks to offer investment strategies that are better placed to address the forthcoming challenges as well as detail on some of the metrics to identify the best performing companies going forward.

Latest News

Morningstar has published a review of the European ETF market for the first quarter 2024, which finds that it gathered..
US ETF issuers of active ETFs are facing an increase in fees from the big custodian firms, such as Charles..
ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by