Really interesting. This is not the first time I've read a serious critique of index fund investing. I have yet to hear of an alternative with a similar risk/reward profile.
Chris Hohn has operated during the same period as Terry Smith, bought quality names, and has not underperformed. It is possible that Terry Smith has simply made poor picks and overdiversified his fund. It can be easy to blame AI mania or passive funds for one's underperformace. Ultimately, long time scales of 5-10 years will reveal the truth.
Really interesting. This is not the first time I've read a serious critique of index fund investing. I have yet to hear of an alternative with a similar risk/reward profile.
With the simplicity of just buying and holding an index
Chris Hohn has operated during the same period as Terry Smith, bought quality names, and has not underperformed. It is possible that Terry Smith has simply made poor picks and overdiversified his fund. It can be easy to blame AI mania or passive funds for one's underperformace. Ultimately, long time scales of 5-10 years will reveal the truth.
I'm not so sure that Hohn outperformed in the past 5 years.
indeed, https://stockcircle.com/portfolio/chris-hohn/performance
5-Year Performance: 46.67%
vs SP500: 63.57%
Thanks for the write up. Very well written!