NICK VAN RENSBURG: Is passive investing a trend, or a cycle?
Most assume it will go on in perpetuity, but I believe it is finite and will probably end with a bang, not a whimper
08 March 2024 - 05:00
Passive investing has grown rapidly over the past decade, and for good reason. Investors are attracted to the lower fees of passive funds, as well as the lower risk of underperforming one’s chosen equity benchmark.
Passive also has a significant benefit in that it holds no cash, and thus avoids cash drag. You want the Nasdaq; you will get probably 99.8% Nasdaq exposure. Active funds are often required to hold a cash buffer...
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