“Personally, it would be a lot of fun to be a portfolio manager in a world where 80% of the market was indexed, because there would be huge liquidity with dumb money.”
Index funds have disrupted the status quo and passive strategies are expected to play an increasingly large role in the investment industry’s future. Yet some observers, like Nobel laureate Richard H. Thaler, think that future will be full of opportunities for active investment managers.
At the 70th CFA Institute Annual Conference in Philadelphia, Thaler pointed out that an environment dominated by passive indexing strategies holds greater opportunities for the smaller number of investors who remain active.
The question facing today’s portfolio managers is how they can survive long enough to see that future. Read More