Beta Investing

This graph, generated by data provided by Barclays in its 2013 Equity Gilt Review, shows the returns generated by investing £100 in the UK stock marklet in 1945. It demonstrates that the bulk of the returns delivered by the equity market come from dividends, growth in dividends, and gains from reinvesting the dividends.

Only 5% of the returns come from the capital gain of the underlying shares.  It therefore makes sense to concentrate on the return from the whole market, known as beta, rather than trying to do better than in it by selecting some shares and not others to chase capital gains.  The value added by stock selection is known as alpha. In practice it is extremely hard to do and indeed few have actually achieved it consistently over a long period of time.

This website aims to help investors who are looking for the best way to get the return of the market, or beta without trying to squeeze the last few drops of additional return. The alternative is to find a fund that has additional cost and complications and seeks to beat the market.   Unfortunately, no one knows how to do that consistently.

Comparing funds is not easy, especially when some are structured as ETFs and some as OEICs.  We have done our best to compile the data and assemble it on the website www.smart-beta.co.uk. The fund we run can be found at www.themunrofund.com.

Nothon on this site should be regarded as advice. It is for background information only.