Redefining diversification in a concentrated market

The returns that passive investing has produced over the years have turned people against an active approach. Sure, passive strategies are simple, cheaper, and have made investors very happy, but they are not foolproof. As we are seeing today, markets are constantly changing and active investors can adapt and overcome, whereas passive investors are committed to going with the flow. High market concentration and valuation changes can leave passive investors open to risk, especially if funds are predominantly in the most expensive areas. It’s time for even the most diehard of passive investors...