Could the passives tide turn?

Could the passives tide turn?

Anna Fedorova

As active managers struggle to find value in current volatile markets, with many holding unusually high cash allocations, investors have continued to flock to passive products.

The latest report from the ETFGI consultancy showed assets in ETFs reached another milestone in recent weeks. Their AUM surpassed that held in hedge funds for the first time on record in Q2, with nearly $3trn now invested in ETFs globally. This shift is understandable, considering the average cost of investing in an ETF is 31bps, according to the research firm.  In contrast, many hedge funds still charge clients based on the old 2%/20% fee structure, encompassing a 2% management fee and a 20% performance charge. But at a time when equity valuations are looking pretty full, are inve...

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