dignan wrote: ↑Wed Feb 19, 2020 3:45 pm
h82goslw wrote: ↑Wed Feb 19, 2020 3:28 pm
jhfenton wrote: ↑Wed Feb 19, 2020 11:45 am
Says a hedge fund manager whose livelihood depends on people avoiding index funds.
Wake me up when 80-90% of the equity market is indexed, and we can have a debate about at what level price discovery would break down.
So this makes me wonder....what percentage of the equity market is indexed now? We've all heard that people are flocking to passive investing using index funds...what's the real number?
It looks like "market share for passively managed funds has risen to 45 percent" in 2019.
https://www.cnbc.com/2019/03/19/passive ... arket.html
Yeeeeessssss, that statistic is being quoted a lot lately by people decrying the evils of indexing, but it's asset share
of US stock-based funds. They usually leave out the detail that mutual funds and ETFs combined only hold 30% of the stock market, and incidentally
that number is not increasing:
in recent years, they have held a fairly stable share of the securities outstanding across a variety of asset classes. At year-end 2018, investment companies held approximately 30 percent of the shares of US-issued equities outstanding.
So the meaningful number isn't "45%." It's 45%
of 30% = 14%. Not nearly as alarming.
(When I began paying attention to such details, which was perhaps 2009 or thereabouts, the world's largest mutual fund was the PIMCO Total Return Fund, a bond fund which had something like $400 billion in assets. Total Stock, all share classes, was considerably smaller. The PIMCO fund's assets plummeted when star manager Bill Gross left, losing about 2/3rds of its asset in a year, while continuing to perform just fine--I mention that because people sometimes think a fund must tank when investors "run for the exits." Anyway. Total Stock now has over $900 billion in assets. With reasonable luck it should hit a trillion sometime soon. The US stock market, grand total, is something in the ballpark of $35 trillion, so Total Stock alone now holds 2.6% of all US stocks, and thus all by itself is over 8% of the mutual-fund-and-ETF market. I don't find that alarming, though I'm sure Vanguard's competitors do.)
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.