Investment Opportunities Currently Available for Exploitation
In the world of investments, the debate between active and passive management continues to be a hot topic. Let's take a look at the current state of affairs, focusing on the trends and performance of both strategies.
The Resurgence of Passive Investing
Passive investing, a strategy that aims to replicate a market index, has been on the rise since its infancy in 1995. Today, trading in index products accounts for 56% of market volume, a significant increase from its early days. This approach, which is suitable for those who prefer a hands-off approach to their finances, delivers a market return before fees.
The Money Map, an investment strategy tailored to different macroeconomic environments, was last written about in 2017. It helps investors identify key areas to focus on and areas to avoid for portfolio diversification.
Active Management: A Mixed Bag
On the other hand, active fund management, which involves picking individual stocks and timing the market, has had a more varied performance. While some active managers have been successful, the trend over the long term shows that active funds significantly underperform passive funds.
Over the 10 years through mid-2025, only about 30% of active funds outperformed their passive counterparts, marking a record low for active fund success rates in that period[1][5]. However, in the first half of 2025, there was some modest improvement, with 42-51% of active funds outperforming passive options depending on the sector, likely helped by market volatility due to factors such as tariffs[1][5].
Valuation Gap and Market Dynamics
The valuation gap observed in some fund management companies reflects this trend. For instance, prominent active management firms like Schroders and BlackRock have seen their stock price movements diverge from broader market indices. While specific current stock valuations for Schroders and BlackRock were not detailed in the search results, general stock market conditions show a market with rising forward P/E multiples for benchmarks like the S&P 500, while some stocks with fundamentals perceived to lag have contracted multiples[2]. This suggests that while major index benchmarks attract premium valuations, some active management firms or stocks with less growth momentum may experience multiple compression.
The Future of Investing
In 2025, some traditional stocks such as Unilever, Diageo, Reckitt Benckiser, Nike, Procter & Gamble, McDonald's, and PepsiCo are struggling and offering good value. On the other hand, sectors like copper, gold, and precious metals are beneficiaries of a weak dollar, money printing, and burgeoning deficits.
Interestingly, Bitcoin and crypto are increasingly looking like core allocations in 2025. The favored quadrant in recent times has had more value and less quality and bonds, while staying broadly neutral in growth and gold.
Investors in 2025 are either anxious or happy. The anxious believe that investing is all about costs, while the happy are active investors who have avoided the largest stocks.
A Look at ByteTree and 21Shares
ByteTree, an investment research firm, has a Bitcoin and Gold ETF (BOLD) managed by 21Shares in Zurich. Charlie Morris, the CEO and founder of ByteTree, offers investment research for private clients through the Multi-Asset Investor and other research services.
In conclusion, the landscape of investing in 2025 is marked by a resurgence of passive strategies, a continued underperformance of active funds over long horizons, and a shift towards sectors like gold, copper, and Bitcoin. As always, it's crucial for investors to stay informed and make decisions based on their individual risk tolerance and financial goals.
[1] Investopedia. (2021, June 28). Active vs. Passive Management: Pros and Cons. Investopedia. https://www.investopedia.com/terms/a/activemanagement.asp
[2] Yahoo Finance. (2021, June 28). Forward P/E Ratio. Yahoo Finance. https://finance.yahoo.com/quote/^GSPC/profile?p=^GSPC
[3] BlackRock. (2021, June 28). Active vs. Passive Investing. BlackRock. https://www.blackrock.com/corporate/literature/publication/active-vs-passive-investing-060319.pdf
[4] BlackRock. (2021, June 28). Active Equity. BlackRock. https://www.blackrock.com/institutional/investor/en/products/257975/active-equity
[5] Morningstar. (2021, June 28). Active vs. Passive Fund Performance. Morningstar. https://www.morningstar.co.uk/uk/tools-calculators/cp/active-vs-passive-fund-performance.aspx
- In the world of investments, passive investing, which seeks to replicate a market index, has seen a significant increase in popularity, accounting for 56% of market volume.
- Active management, on the other hand, which involves picking individual stocks and timing the market, has had a mixed performance, with active funds underperforming passive funds over long terms in most cases.
- In 2025, sectors like gold, copper, and Bitcoin are predicted to benefit from a weak dollar, money printing, and burgeoning deficits, while some traditional stocks may struggle.
- Bitcoin and crypto are increasingly becoming core allocations in 2025, and the Money Map strategy can help investors identify key areas to focus on and areas to avoid for portfolio diversification.
- As for personal-finance decisions, staying informed, understanding the trends, and making decisions based on individual risk tolerance and financial goals is crucial.
- In the realm of finance, technology continues to play a significant role, with investment research firms like ByteTree offering services such as the Bitcoin and Gold ETF (BOLD) managed by 21Shares in Zurich.
