Investors should spend less time worrying about a stock market bubble and more time worrying about the popularity of exchange traded funds (ETFs), according to Charles Plowden, manager of Monks Investment Trust (MNKS).
Mr Plowden, who has run the trust since March 2015, says the volume of "dumb money” invested in passive products reminds him of the ill-fated complex financial vehicles that led to the last financial crisis.
"I suspect the same clever bankers who came up with collateralised debt obligations (CDOs) and credit default swaps (CDS) have found a new bunch of suckers to sucker," he says. "ETFs are unthinking and put together by investment bankers mainly for their own purposes so that they have products to sell. It is not contributing anything to the wider economy, it's not making capital raising cheaper or more efficient, it's not protecting savers from volatility – it's just boosting investment bank revenues for that quarter."