The Efficient Market Hypothesis (EMH) asserts that financial markets are "efficient", or that prices on traded assets, e.g. shares, bonds, or property, already reflect all known information and therefore are unbiased in the sense that they reflect the collective beliefs of all investors about future prospects.

Within highly analysed markets such as the S&P 500 and the FTSE, there is an overwhelming amount of support from the academic community that suggests markets are efficient.

However, EMH was further supported by the ‘Sandler Report’ commissioned by the UK Government in 2003. This pointed out that the average actively managed UK Unit Trust underperformed the market by 2.5%. The reason? High charges and unsuccessful active fund management.

Interpretation of the EMH for smaller and or emerging markets where acquiring data is less intensive and the reporting standards less rigorous is not as conclusive.