Finance

Passive investing movement gets its Hollywood moment

Published

3 months ago

March 7, 2025

Dimensional's David Booth and filmmaker Errol Morris on investing documentary 'Tune Out the Noise'

A new documentary titled “Tune Out The Noise” brings together some of the academic heavyweights whose work reshaped the financial industry and helped lower costs for all investors.

The film, made by Academy Award-winning documentarian Errol Morris, chronicles the rise of academic finance in the middle of the twentieth century and how it led to a boom in passive investing and to the creation of Dimensional Fund Advisors, which now has more than $700 billion in assets under management.

Morris and David Booth, Dimensional chairman and the namesake of the University of Chicago Booth School of Business, spoke to CNBC’s Bob Pisani on Thursday ahead of the film’s New York premier.

“It’s really about how markets work and how different that is from people’s intuition or perception,” Booth told Pisani.

In addition to Booth and some Dimensional executives, the film features interviews with many of the biggest names in financial academia, including Myron Scholes, Robert Merton, Eugene Fama and Kenneth French.

The work of those academics, who have all had roles at Dimensional over the years, helped push the investment world away from traditional stock picking and toward passive, low-cost strategies. That trend extends beyond Dimensional, with firms like Vanguard using those insights to build their own businesses.

“People are getting a much better deal now than when I started in 1971,” Booth said.

Morris’ previous work includes “The Fog of War,” which won the Academy Award for best documentary feature in 2004, as well as “The Thin Blue Line.”

“One of the reasons I became a filmmaker, or a documentary filmmaker, whatever you want to call it, is I like to hear people telling stories. And this is filled with it,” Morris said of his new film.

Finance

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Published

2 days ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”