Wednesday, 6 September 2017

Indexing's tops, but active managers still matter

Low costs, predictability and the overwhelming positive performance of the broad indexes have swayed many investors to indexing's corner.
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Straight talk from the money editor
Passive investing has become the new black. Investors, over the last decade, have poured $1.57 trillion into index funds and pulled $1.3 trillion out of active funds. Low costs, predictability and the overwhelming positive performance of the broad indexes have drawn investors to the passive corner, experts say.
While indexing may seem like a panacea for investors, experts are concerned about the long-term impact. Industry experts say passive investing makes the market less efficient — meaning, less "honest." They also say passive investing inflates already-hot market sectors and many believe it could be a bubble that will eventually pop. "It basically distorts things," one advisor told me. For more cool stuff like this, please follow me on Twitter @jimpavia.

Jim Pavia
Money Editor
@jimpavia

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