CA - Passive Investing Is Starting To Break The Market
2024-03-18 16:42:42 ET
Summary
- Passive share of investing continues to rise, reaching over 50% of total assets managed in December 2023.
- Passive investing can potentially break the market by disrupting price discovery and causing stock prices to no longer reflect investor views.
- Early signs of market strain can be seen in sectors with high passive share, such as U.S. equities and real estate.
Financial theory suggests that there is a limit to how high passive investing can get as a percentage of total investing before it breaks the market, but no one knows exactly where that threshold is....
Passive Investing Is Starting To Break The Market