Why Is Bill Ackman Worried About How People Invest?
Bill Ackman, who runs Pershing Square, has two worries: that passive index funds now hold more than half of fund assets (54%, citing Goldman Sachs), which makes index membership matter more than a company's business, and that a handful of megacap technology stocks drive most of the index's gains. He also argues that deep research into a few companies beats the market, but his own 2026 funds have lagged the S&P 500 so far.
- His fix is concentration: own 8 to 12 businesses you can analyze fully.
- The counterpoint is that most active managers lag index funds over long periods.
- You can check what his firm actually owns on the 13F-based page linked below.
This is educational analysis, not investment advice. Figures are readings from early November 2026, mostly from press reports and company filings, and they will move.
What is Ackman actually worried about?
The worry is not that people invest too little. It is that the way they invest has changed the market. When most new money goes into funds that buy every company in an index in proportion to its size, the biggest companies get the biggest inflows, regardless of price. Ackman has said that high levels of passive flows increase the importance of index inclusion, and he told investors his portfolio companies were taking steps to qualify for the S&P 500.
He has also pointed to how narrow recent gains have been. A small group of very large technology companies, Alphabet among them, drove a large share of the index's returns over two years. That matters for anyone holding an index fund, because the fund quietly became a concentrated bet on those names.
What does the data say about passive investing?
| Claim | What is reported | How to read it |
|---|---|---|
| Passive share of fund assets | More than half of mutual fund and ETF assets, 54%, per Goldman Sachs data cited by Ackman | A real shift, but it counts funds, not trading: most daily trading is still active |
| Index concentration | A handful of megacaps account for a large part of recent index gains | True by construction: cap-weighted indexes grow the winners' weight |
| Active vs passive results | Morningstar studies find most active funds trail their passive peers over long periods | An older finding, but consistent across many studies |
| Ackman's own claim | $10,000 in 2004 became about $460,000 in his strategy against about $90,000 in the broad market | His figure, not independently audited, and it covers one strategy |
The tension is plain. Ackman says concentrated, researched bets win, while the broad evidence says most people who try to pick winners do not. Both can be true if you are one of the few who can analyze a business deeply. The hard question is whether you are.
How have his own funds done in 2026?
Not well so far. In April 2026 Pershing Square USA, a closed-end fund meant to let US investors invest alongside him, listed and fell about 18%. Ackman said retail investors do not know how to invest in IPOs, then clarified he was not blaming them and was describing technical selling pressure. Reports noted that institutions took more than 80% of the money raised, which made the blame look misplaced.
Through July, Pershing Square USA was down 3.5% and the London-listed Pershing Square Holdings down 9.2%, while the S&P 500 total return index was up about 10%, according to RTT News. Treat these as a snapshot from one source. A few months says little about a strategy built for decades, but it does show the cost of concentration when a few holdings lag.
Is he right that index membership matters more?
Partly. Studies of index additions have long found that a stock tends to rise when it is added, as funds are forced to buy it. If passive money keeps growing, that effect should matter more, and Ackman is acting on it. The flip side is that when a stock is removed or its weight falls, the same forced selling works in reverse.
- For index funds: they hold what has already worked, so you buy the winners at high prices.
- For active investors: mispricing can persist, because index funds do not care about valuation.
- For you: an S&P 500 fund today is more tilted toward megacaps than the average fund ten years ago.
You can see the valuation side of this on our bubble checklist and in the Shiller CAPE of 40.1 on the Crash Indicator.
What can an ordinary investor take from this?
Three practical points follow, none of which require agreeing with Ackman.
- Know what your index fund owns. Look at the top ten holdings. If they are a quarter or more of the fund, you are concentrated already.
- Match your effort to your edge. Concentration rewards deep research and punishes guessing. If you will not read the filings, diversification is the honest choice.
- Check what he owns, not only what he says. Quarterly 13F filings show Pershing Square's positions with a delay, as explained in how to read a 13F. The current list is on the Pershing Square page.
A position in his funds is also not the same as owning his stocks. Closed-end funds can trade at a discount or premium to their assets, which adds a second source of gains or losses.
What is the case for concentration, and the case against?
| Approach | Case for | Case against |
|---|---|---|
| Concentrated (8 to 12 stocks) | Deep research on each; big winners matter; no dilution by weak ideas | One mistake costs a lot; results can lag for years; hard to do alone |
| Diversified index fund | Low cost; no need to pick; captures the market's return | Holds expensive stocks too; concentrated in the largest companies |
| Active diversified fund | A manager's judgment across many stocks | Fees must be recovered before you gain; most trail the index |
The honest summary is that each approach rewards a different skill. Concentration rewards research and temperament. Indexing rewards patience and low costs. The mistake is to pick the first without having the second kind of skill, and then to blame the market.
What terms should you know?
| Term | Plain meaning |
|---|---|
| Passive investing | Buying funds that track an index rather than picking stocks |
| Index inclusion | Being added to an index, which forces funds that track it to buy |
| Closed-end fund | A fund with a fixed number of shares that trades at a price that can differ from its assets |
| 13F | A quarterly filing of US stock holdings by large managers |
| Concentrated portfolio | A portfolio with few holdings |
| Cap-weighted index | An index weighted by company size |
| Active management | Choosing investments to try to beat an index |
Sources
- Institutional Investor: Ackman's Pershing Square suffers from the passive phenomenon
- Motley Fool: Bill Ackman overhaul of Pershing Square stocks (August 23, 2026)
- RTT News: Ackman unveils six new investments in major portfolio overhaul
- Yahoo Finance: Ackman's new IPO and the fall in PSUS (April 2026)
A famous case of a different investor: how Berkshire made 30 times its money on BYD.
Frequently asked questions
Why is Bill Ackman worried about passive investing?
He says passive funds hold more than half of fund assets, which makes index membership matter more and concentrates the market in a few megacap stocks.
Does Ackman say people should not buy index funds?
Not directly. He pitches concentrated investing in a few researched companies, but has also said he wants to benefit from passive flows by getting his holdings into indexes.
How have Ackman's funds performed in 2026?
Through July, Pershing Square USA was down 3.5% and Pershing Square Holdings down 9.2%, against about a 10% gain for the S&P 500, per RTT News.
Can I see what Pershing Square owns?
Yes. Its quarterly 13F filings list its US stock holdings, and this site summarizes them on its Pershing Square page.