According to S&P Dow Jones Indices, 10% of all the assets invested into the S&P 500 are in passively managed funds. This is up 20% from a year ago to $1.9 trillion.
The $1.9 trillion number isn’t a total of all passively managed assets. There are considerably more assets invested in passive strategies as there as a multitude of different indices tracked.
“passive investing was “now the mainstream approach” as investors have increasingly lost faith in active management.” – John Rekenthaler
According to CIO magazine, “Morningstar columnist and researcher John Rekenthaler earlier this month claimed passive investing was “now the mainstream approach” as investors have increasingly lost faith in active management” and I think he’s right. Outside of our dividend covered call strategy, we’ve been using more and more indexed funds as our research uncovers underperformance by existing active managers in asset class after asset class.
I’m think we haven’t seen the end of headlines like this one. As more and more advisors and investors realize where their returns are coming from, more and more will choose passive funds.