Sixty-nine percent of P&I Online readers believe both fees and performance are why active management is falling out of favor.
Last week, P&I Online asked “Why do you think active management is falling out of favor?” in conjunction with the publishing of the results of Pensions & Investments’ indexing survey. Indexed assets surged to $8.97 trillion in the year ended June 30, a 24% increase from a year earlier, according to the survey.
Further exemplifying the trend toward passive from active are BlackRock Inc.’s assets. For the five years through June 30, the share of ETFs in BlackRock’s $4.3 trillion in long-term AUM jumped to 23% from 17%, while traditional index strategies rose to 43% from 41%. Active strategies, meanwhile, dropped to 34% of the total from 42%.
“Institutional investors are being drawn toward the passive space on the basis of performance and on the basis of fees,” Jamie Farmer, New York-based managing director, index investment strategy at S&P Dow Jones Indices, told P&I.
The results of the poll support Mr. Farmer’s assertion.
Of the readers who do not believe both fees and performance are the reason, “fees too high” alone received 16% of the vote and “returns too low” alone received 15% of the vote.
Vote in this week's poll below: