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Total market cap of S&P 500 have increased from $13T to $21T from 2012 to 2017 without having corresponding underlying financial growth in companies. This $8T d
by sytelus 10y ago
Total market cap of S&P 500 have increased from $13T to $21T from 2012 to 2017 without having corresponding underlying financial growth in companies. This $8T difference feels tantalizingly close to new investment money flowed in via ETFs. I am wondering if current rise in S&P 500 can almost entirely attributed to new money flowing in to ETFs. If this thesis is correct then we can continue to expect more bull market for next few years as we are very likely not even half way through this cycle of money flowing from active strategies to passive strategies. In other words rise of S&P 500 indexes would become self full filling prophecy for at least next few years.
- danmaz74 10y agoAre you assuming that active strategy wasn't investing in S&P 500?
- udev 10y agoNew money into ETFs does not necessarily mean new money into the market. A big part of that is money just switching from actively managed mutual funds to passive index funds, e.g. recently pension funds in some states.
- sytelus 10y agoActive strategy may be investing in small/mid caps, currency, commodities, bonds, emerging markets and so on. Lot of that money would be pulled in to biggest popular indexes now such as S&P 500.
- deleted 10y ago[deleted]
- nikcub 10y ago> This $8T difference feels tantalizingly close to new investment money flowed in via ETFs FT says it is about $2T net in the past 8 years, and about a third of volume today[0]. Also an interesting article because it talks about the potential issues on market volatility ETF inflows introduce [0] https://www.ft.com/content/d12ac93c-a507-11e6-8b69-02899e8bd9d1 https://www.ft.com/content/d12ac93c-a507-11e6-8b69-02899e8bd...