Record S&P Runs Away From Mutual Funds

The video discusses the current market environment, highlighting the challenges of making money despite the popularity of index-based investments like ETFs. It explores how liquidity from the Fed has tightened market correlations, making stock differentiation difficult. The performance of large and small cap funds is compared, with small caps showing slightly better results. A study on Swedish money managers suggests index funds may be a better choice for average investors. The video concludes by considering the potential resurgence of stock picking as a valuable strategy.

What is one reason why index-based investments have become popular?

• They are only available to institutional investors.

• They are less risky than government bonds.

• They offer a diversified portfolio with lower fees.

• They guarantee higher returns than individual stocks.

How has the Fed's liquidity affected market correlations?

• It has had no impact on correlations.

• It has made correlations more volatile.

• It has tightened correlations more than usual.

• It has loosened correlations significantly.

What is a notable trend in the performance of small-cap funds compared to their benchmarks?

• About half of small-cap funds trail their benchmarks.

• All small-cap funds outperform their benchmarks.

• Small-cap funds perform worse than large-cap funds.

• Small-cap funds are unaffected by market trends.

What is the belief among some strategists regarding the future of stock picking?

• Stock picking will remain unchanged.

• Index funds will outperform stock picking.

• Stock picking will become more important.

• Stock picking will become obsolete.

Why might stock picking become more relevant according to some market analysts?

• Retail investors are avoiding index funds.

• Index funds are losing popularity.

• The Fed has stopped adding liquidity, reducing correlations.

• The Fed is increasing liquidity injections.