Trillions

September 1, 2021
A Financial Times global correspondent delivers a bracing story of how money works--or, depending on your point of view, doesn't work. There are two broad categories of investing, characterized incompletely by the terms active and passive. In the first, investment funds are closely managed, while in the second, they're parked in broad-based accounts that cover the range of the market and earn out by virtue of being balanced. As Wigglesworth's account opens, Warren Buffett offers a million-dollar bet "that an index fund that simply tracked the US stock market would beat any group of high-flying hedge fund managers." In the strictest terms, Buffett turned out to be right, though with qualifications. Wigglesworth sets the Buffett wager against the background of a changing Wall Street, where the culture of "prudent men...quietly tending casks of slowly maturing capital," as one magazine described it in the 1960s, gave way to a rapacious ethos of boundless fortune-seeking. The "lazy" path invented by financiers who translated mutual funds into index funds turns out to be the safer course for most investors, at least in part because the active managers have a tendency to pay themselves handsomely and have no incentives to keep their funds manageable. Yet, as Wigglesworth writes, the hedge fund culture is alive and well: "Wall Street loves success more than modesty," even if success comes and goes and the tortoise generally beats the hare. Meanwhile, though the index-fund approach ensures that the average investor will profit over time, it's not without its drawbacks, including, as the author notes, negative effects on corporate governance and accountability. For all that, he concludes, "the index fund is one of the few truly, nearly unambiguously beneficial inventions, a disruptive technology that has already saved investors hundreds of billions of dollars, sums that will undoubtedly reach trillions in years to come." Finance wonks and investment strategists will enjoy this plainspoken tour of index funds and their discontents.

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October 1, 2021
It is hard to imagine the daunting task of tracing the creation of a complex economic product as it weaves through the hands and minds of more than 30 economic, mathematics, and finance wizards. Happily, that task is taken on by a financial journalist here. Wigglesworth, a seasoned reporter with The Financial Times, invokes each contributor's humanity as well as their genius. The tangled pathway leading to the establishment of the index fund tracks nuances and power plays that are most fully understood by industry insiders. In Trillions, the complexities are laid bare in comprehensible language with insight into the long-game contributions of so many individuals, whose parts comes to fruition only decades after the initial ideas are generated, shared, and continue their evolution. With the feel of a thriller, Trillions illuminates the index fund and its place in the world of financial investment. A natural selection for business school collections; public libraries can expect demand both from patrons within the finance industry and those seeking to better understand how that world works.

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