Are index funds the next bubble? The hidden risk of passive investing

Passive index funds have dominated in recent years, both in terms of popularity and, in many cases, returns. But do they bring a risk that many are overlooking? In this episode of the Personal Investor podcast, Ed and Tom discuss the warnings of two famous investors on whether passive investing could be the next bubble. Terry Smith’s letter to shareholders: https://www.fundsmith.co.uk/media/lfhpxi1x/fundsmith-equity-fund-semi-annual-letter-to-shareholders-2026.pdf Simon Evan-Cook’s article ’22 notes and queries on passive investing’: https://citywire.com/new-model-adviser/news/simon-evan-cook-22-notes-and-queries-on-passive-investing/a2487884 Capital at risk. This is not a personal recommendation. ----- 0:00 - Intro 1:12 - What is passive investing? How has it done recently? 3:00 - Who is Terry Smith? 5:23 - His message to investors 8:00 - The active vs passive debate 9:45 - Why active managers are changing their approach 11:26 - The passive investing “feedback loop” 13:45 - Passive fund dominance in recent years 15:23 - Why a vibrant active sector is important 18:15 - Is volatility increasing? 19:11 - Has the market moved away from analytics and towards sentiment? 20:07 - What can an ordinary investor do? ----- Follow us on social media: Facebook: https://www.facebook.com/FidelityInternationalUK LinkedIn: https://www.linkedin.com/company/fidelity-international/ Visit our site: https://www.fidelity.co.uk?utm_term=pi_market_insight&utm_campaign=pi_topical&utm_medium=organic_social&utm_source=Youtube.com&utm_content=YT_Description Get more insights: https://www.fidelity.co.uk/markets-insights?utm_term=pi_market_insight&utm_campaign=pi_topical&utm_medium=organic_social&utm_source=Youtube.com&utm_content=YT_Description Get updates to your inbox: https://page.ei.fidelity.co.uk/manage_your_subscriptions.html?utm_term=pi_market_insight&utm_campaign=pi_topical&utm_medium=organic_social&utm_source=Youtube.com&utm_content=YT_Description #Podcast #FidelityUK #Personal

Added 25 Jul 2026