As you can see last week’s “blogger wisdom” series garnered some great feedback. I want to thank everyone who participated and those of you who stopped by to read their thoughts. By definition the questions I asked are things I have been thinking (and writing) about. So without any further ado here are answers to my own questions. (Click on the question to read the original post.)

Question: Venture capital has likely dried up for stand-alone robo-advisors. If so, where does the business of rob-advising go? Or said another way is robo-advising simply going to be the way advisors manage client accounts going forward?

Four years ago, or so, I was writing in my book about the potential for algorithmic investment solutions. The surprising part isn’t that they have become table stakes for investment firms, the surprising thing is how quickly it went from being a VC-funded niche to becoming a standard offering of Vanguard, Schwab and Fidelity. A couple of the VC-backed robo-advisors will likely remain independent but in this case the establishment quickly caught onto the opportunity.

Question: The ‘smart beta’ or factor-investing bubble seems to be in full bloom. Is ‘smart beta’ simply the new active investing? If so, what happens to the entire fund industry which was built on the high fees associated with active management?

I do think that smart beta, in its many forms, will eventually displace high fee, low tracking error ‘active’ funds. This will obviously take some time. In the mean time investors are going to be horribly confused by the various flavors of alternative indexing and many will be end up being confused and disappointed along the way. So, in short, not much changes.

Question: Like just about every other blogger I have been writing on the rise on index investing. Should we care that the percentage of assets in indexes is on the rise, or should we just sit back and enjoy the (low cost) ride?

I believe the answer is both. As an investor you can happily take advantage of nearly free index funds. While at the same time we need to think about the implications of an investment world that is increasingly concentrated and run at the behest of various index funds.

Question: It does not escape me that the entire distribution list on this “Blogger Wisdom” e-mail chain is entirely male. I have written extensively on why this is an issue for the investment industry. What, if anything, can be done to make the investment industry more inclusive?

This was definitely the most controversial question and the in which many bloggers declined to answer. I don’t know if I have a lot more to add than what I have written about previously so I will simply quote myself:

I have been writing for some time now about gender disparity in money management. The situation can be described this as a true market failure. Whether the problem is one of explicit or implicit bias it remains a problem. As with the female coders, it is likely the case that women who reach the level of portfolio manager are highly motivated. This motivation helps create the market failure we discussed and remains an opportunity for institutional funds doing manager hiring. It is unlikely these managers will go with a truly “bias-free” hiring approach but maybe they should.

Question: Think back to the last edition of this series a couple of years ago. Have you changed your mind about something (big or small) over that time period? If so, what and why?

The recent work by Cam Harvey convinced me that much of what we see in published research is likely the result of some form of data mining, whether it be conscious or unconscious. Therefore I am much more skeptical about the results presented in academia and especially in the financial media

Question: What are you jazzed about that no one else is talking about? That could include a book, blog, Twitter feed, song, movie, app, online series, etc…

As you all probably know I am a big fan of podcasts. It is such a new (and vital) medium. It is interesting to see what people do with it. For example the Song Exploder podcast talks with artists about how a certain song came into being. On the viewing front I am looking forward to the second season of Catastrophe on Amazon and looking for some time to binge the rest of Billions.

More Posts This Week

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.