Scrolling through LinkedIn last week, I was shocked by a headline – ‘Passive to overtake active in US by 2024, says Moody’s’.
Wowza! A fair chunk of my working life has been spent working for (active) funds managers, and the thought that their days might be numbered is disturbing. While there has been enormous growth in passive investment, often at the expense of active managers, surely this can’t be the end of the road? This growth in passive investment has come during a prolonged bull market that history tells us will—eventually—end. This is where active managers earn their money, helping protect investors from the worst the bears have to throw at them.
Moody’s based its analysis on redemptions in the US from actively managed funds over the past decade versus inflows into passive equivalents. Is the US experience applicable to Australia?