Don’t panic about passives
Though there is mounting concern about the growth of ETFs as a tool of passive trading, active fund managers still have an important role to play
Anyone following investment markets will have become aware of the growing prominence of the passive investment philosophy, specifically through index tracking funds. The rise of exchange traded funds (ETFs) as the flag-bearer for index tracking as a strategy will surely have appeared on the radar of even the most detached investor. This growing awareness would have been stirred by the industry’s marketing efforts, as well as the growing choice of passive products. In SA those numbers are still a fraction of the overall market, making up less than 2.5% of assets held by the collective investments industry. Globally, the figures are rather different, with one projection being that the value of US passive investments will reach parity with active money by 2020. Given this rate of growth, what is the future for active managers? And if this growth continues unabated, what are the implications for markets and investment fundamentals as we’ve known them? "I do believe this is a global mega...
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