Monday, August 7, 2017

Let's again debate active vs. passive investing and the impact on the economy

Aug 4, 2017

Mark Gilbert is a Bloomberg Gadfly columnist covering asset management. He previously was a Bloomberg View columnist, and prior to that the London bureau chief for Bloomberg News. He is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”

Do low-cost index-tracking funds really threaten to turn us all into communists? A year ago, Sanford C. Bernstein & Co. warned that “passive investing is worse than Marxism.” 

Today, the most-read story on Bloomberg is about Paul Singer warning that “passive investing is in danger of devouring capitalism.” 

The giant sucking sound in the fund management industry in recent years is the noise of money flowing to passive products. 

The rise of exchange-traded funds has been relentless, and shows no signs of slowing. 

If anything, the shift to passive strategies is accelerating, as this chart based on data compiled by Bloomberg Intelligence’s Eric Balchunas shows. read on......