The world according to beta (or momentum investing)

There is a black hole sitting at the heart of many sophisticated investors', wealth advisers' and financial planners' mental world view.

A large part of that group tend to be suspicious about the claims of active fund managers in developed world markets – rightly or wrongly – so they default to a position called the World According to Beta. In this world you dice up various betas, sprinkle on some themes and, hey presto, you have your allocated portfolio. But then something very odd happens – underlying private investors look at all those hugely successful sectors and themes and start complaining. Beta is lovely until someone else’s beta is moving faster. And then the problems emerge. Being analytically disciplined fol...