In financial investment, a pair of most important concepts are active investment and passive investment. Passive investment refers to buying and holding a market portfolio, the purpose of which is to obtain the average market return. Active investment refers to seeking a better investment return than the average market return by choosing stocks, industries and opportunities.
Active investment, in order to get a better return on investment than passive investment, needs to bear greater investment risks. The risk is that investors may get above-average returns or below-average returns. All investors in the market add up to get the average market return. Among them, the total income of all active investors is the average income MINUS the transaction cost. If an active investor gets an excess return, then there must be another active investor whose return is below average. Therefore, if you can't beat others in active investment, then you are the target of slaughter.
The simplest passive investment method is to buy and hold a market index fund, such as the Shanghai and Shenzhen 300 Index Fund. In the past few years, index funds and ETFs have attracted more and more attention, and more and more investors choose to invest through index funds. This trend makes many active fund managers feel nervous and start to worry about their jobs.
A widely quoted saying is that if more and more investors choose to buy index funds and join the passive investment camp, active fund managers will face less competition, so they are more likely to beat the market and get excess returns.
At first glance, this statement seems to make sense. Because if everyone buys passive index funds, the market efficiency will decline. The less efficient the market is and the more the price deviates from the fundamentals, the more likely it is for active funds to find this price distortion and profit from it.
However, to verify whether a statement is reasonable, we can't just look at the surface. We need to study and analyze the evidence. Only in this way can we draw a more objective and rational conclusion.
Next, let's look at the data in the United States.
In the past few years, the number of American investors who choose passive investment has greatly increased.
For example, at the end of 2008, the total assets managed by active funds in the United States were about $4.6 trillion, while the total assets managed by passive investment funds were about 1 1000 billion, accounting for about 19% of all fund management assets. By the end of 20 18 years after 10, the assets managed by active and passive funds were1040 billion dollars and 6.4 trillion dollars respectively, of which passive management accounted for about 38%. In other words, the market share of passively managed assets has doubled in ten years.
According to the above logic, in this period, actively managed funds should perform better, because more people choose passive investment. But what is the truth? We can look at the SPIVA research results published by S&P. This study counts the percentage of active public offering funds that outperform the market in the United States.
SPIVA report in 2008 shows that in the five years up to 2008, about 79% of active Public Offering of Fund could not outperform the market, that is, almost 80% of Public Offering of Fund could not obtain excess returns. After 20 18 and 10 years, looking back over the past five years, 87% of the active Public Offering of Fund failed to win the market.
In other words, the active public offering of funds that can't run the market has not decreased, but has increased. Although more and more people buy passive index funds, it is more difficult to outperform the market.
Why is there such an unexpected discovery? In fact, if you think about it carefully, the reason behind it is not difficult to explain. To sum up, there are two:
First, most investors who quit the active investment competition and are willing to buy index funds are self-aware and admit that they are not so powerful "losers". After they quit, players who stay and continue to focus on active investment have a higher average investment level.
Generally speaking, the vast majority of investors may have a dream of "investing in God" at the beginning, dreaming that they will become Buffett's second one day. Few people will take the initiative to admit that they are not so powerful on the first day, but they are actually a "leek" that has been harvested. Some investors, after suffering losses, gradually realize the reality, realize how much they have and how difficult it is to beat the market, so they will choose to join the army of passive investment. In this process of self-screening and elimination, fewer and fewer players participate in active investment, but the players who stay are stronger, or at least win more and lose less. So naturally it is more difficult to beat each other.
Second, the effectiveness of the market has improved.
The improvement of effectiveness is mainly reflected in the following aspects. First of all, information dissemination is faster and cheaper. Compared with ten years ago, our internet speed is much faster now, mobile phones are widely used, and all kinds of information about companies and economy are greatly increased and spread faster. Therefore, it is much more difficult to seek excess returns based on information time difference.
Secondly, the number of talents in the financial industry and the efficiency of using tools have made great progress. In today's investment industry, obtaining CFA certificate is no longer a scarce product, but a necessity. A large number of graduates from key universities, including many graduate students and doctoral students, have entered the fund investment and asset management industries. Any fund with a certain scale, without several sets of quantitative investment and trading strategies based on computer programs, is embarrassed to talk to people. All these factors improve the efficiency of the market.
Active investment participants are stronger and the market is more efficient, which explains why it is more difficult to beat the market even if there are more people buying index funds.
The above is the situation of the American market, so what about our China market? Unfortunately, for the China stock market, there is no statistical research like SPIVA, which allows us to directly observe the proportion of active Public Offering of Fund outperforming the market. However, we can also get a glimpse of the leopard through some other data research.
For example, in 2007, among all A shares listed on the Shanghai Stock Exchange, the market value of individual investors' shares was close to 50%, much higher than that of institutions (about 32%) and legal persons (below 20%). However, 20 17 years after 10, the proportion of individual shares dropped to 2 1%, and the proportion of legal person shares rose to about 62%. In other words, the investor structure of A-shares has undergone tremendous changes during this decade. The main force of the stock market is corporate shares, not those retail investors. There will be fewer and fewer "leeks" that institutions can cut, which will significantly increase the difficulty for active funds to outperform the market.
Secondly, in the past 10 years, the number of funds investing in A shares has experienced rapid growth. By the end of July, 2065438+2009, the number of Public Offering of Fund invested in the secondary market exceeded 6,000. The number of private equity investment funds is close to 40 thousand. Competition among peers has greatly improved the effectiveness of the market, and it is more difficult for any fund to outperform the market.
If there is no superior information or speed advantage in investment, and there is no effective strategy to beat the market, then the rational choice for investors is to buy some low-cost index funds, strive to keep diversification among different assets, and insist on holding them for a long time. This seemingly stupid and simple investment method is the most effective investment strategy, which can help us avoid being hunted in the market and get the best long-term return.
I hope it will help everyone.