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The risk worries me too. Look at it this way: the whole purpose of a market is to allocate capital to productive ends. If everyone invests in index funds, marke
by fdsaaf 10y ago
The risk worries me too. Look at it this way: the whole purpose of a market is to allocate capital to productive ends. If everyone invests in index funds, market capitalization (and thus capital allocation) becomes a function of inertia and ceases to have anything to do with actual performance (because nobody is interested in looking at actual performance). As a result, I'd expect productivity growth to slow.
Guess what? Productivity growth has been slowing.
- tanderson92 10y agoI doubt that the world economic slow growth projections are due to the 36% of equity and bond assets which are indexed instead of actively managed. If that were true, then the 64% of actively managed funds would have a clear opportunity to capitalize on this fact for higher returns.