It’s no secret that the world of active management has been facing some challenges. Recent data from 2023 has shown that passive funds and ETFs now hold more assets under management than their active counterparts. This shift has been a long time coming, but recent years of poor performance for active funds have only accelerated the trend.
One of the main drivers behind this change is the strong performance of the US equity market. Many stock pickers have struggled to outperform the market, leading investors to turn to cheaper and more easily accessible index funds instead.
From DailyBubble’s perspective, this shift towards passive investing reflects a growing trend towards more cost-effective and diversified investment strategies. While active management still has its place, the rise of passive funds and ETFs is a clear sign of changing investor preferences in today’s market.