TSLA - Will The Growth Of Indexing Lead To Its Downfall?

2024-04-13 01:40:00 ET

Summary

• The financial world passed a milestone in 2024 - for the first time, the assets managed by passive investment strategies in the U.S. exceeded those under active management, marking the peak of a decade-long shift toward indexing at the cost of active managers' market share.
• The S&P Annual Survey of Assets from last year reveals a staggering $11 trillion now indexed to the S&P 500, and rightly so.
• As more traders try to capitalize on this index effect between the announcement and effective date, the actual movement of the stock once added or removed from the index can deviate from what we would expect, especially in the long run.

By Joseph Attia & Jeremy Schwartz, CFA

The financial world passed a milestone in 2024: for the first time, the assets managed by passive investment strategies in the U.S. exceeded those under active management, marking the peak of a decade-long shift toward indexing at the cost of active managers' market share....

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