Mumford: Do we need passives in these stagnant markets?

PASSIVES

I was quite amazed to read in the papers that passive investment is the way forward in the present market environment, and some fund management houses are even launching cautious funds.

Why, when for the past three years the FTSE 100 has in effect been ‘range bound’, moving been the 5,000 and 6,000 levels? It is a well-known fact investors tend to wait for markets to rise for some time before committing to equities, and in many cases they buy just when companies and funds investing in them have become ’expensive’. But after three years of ‘stagnation’ in the markets, and the flight to bonds, what is still driving advisers and their clients to be so cautious? There are plenty of opportunities to invest in funds and companies that are providing both attractive dividend...