Advice on smartshares

[huxley]

While I agree that ETF's are a no brainer in that they are low cost and you can be well diversified. Has anyone thought about future returns? With more and more people pumping regularly into a set number of companies e.g. the S&P500, I wonder if future returns will be less than historic.

There's a lot of interesting research from the behavioural economics field looking into this issue. Apparently you have to consider the environment you're investing into and act accordingly.

So.. currently if most of the global capital is actively managed (and you assume assets are correctly priced) you can safely free ride off the collective research through your low cost ETF.

If however you wake up in an environment where most of the global capital was invested passively you might want to start paying someone to research the market and locate opportunities.

For example a passive fund would just allocate funds based on the underlying index, so if Enron is 2% of the market 2% of the capital would be invested in Enron. Basically no one is checking to see if any of the companies are a massive fraud!