The index trap: why passive allocation is the most active risk you can take

Mar 05, 2026

Kilian Niemarkt, Senior Client Portfolio Manager for Global Equities, looks at whether benchmarks are fit for purpose for institutional investors, under current market conditions.

Key takeaways

  • The current market environment has created a fragility that threatens the stability of investor portfolios reliant on index tracking.
  • Any number of potential negative catalysts, such as AI valuation exhaustion as capex realities set in, the failure of debt-financed circular revenue schemes to mask underlying corporate stress, or the emergence of new tech, present a potential risk.
  • The mitigation of these risks requires a shift in investors’ mindset, from being renters of the market via passive vehicles to being owners of great businesses.

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