Darius McDermott: Why following the crowd is a risk to returns

‘Choose your own adventure'

clock • 4 min read

The market's recent gains provide a nice opening to talk with clients about the different benefits active-versus-passive products can bring to a portfolio, writes Darius McDermott

So the FTSE 100 hit a new intra-day high of just shy of 7,130 during trading on Tuesday, eclipsing the 7,122 it reached in April 2015. If you happened to have bought a tracker back on 24 June, you would have made a tidy profit. But I suspect most individual investors did not and, indeed, are more likely to be buying now - around the aforementioned all-time high. The risk, of course, is that UK equities now look a lot more expensive than they did in June. If people start to take some profits at current levels, an investor who purchased a tracker today could very easily be on a fast track ...

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