Lifetime returns are mostly about investor behavior. Save while you are working, invest in stocks of great companies and don’t sell in a panic or buy at the top.
“Passive investment is now growth-tilted, momentum chasing, biased toward popular-weighted indices. Why should you expect the best returns from that?” asks Research Affiliates’ Rob Arnott.
Low-cost index funds are a terrific way to obtain low-cost diversification, but using them does not make advisors or client investors immune to following the crowd over a cliff.