Seeds of destruction? Funds grapple with index effect

Rapid growth fuels anxiety over passive sector’s vulnerability to frontrunning

The rise of passive, index-replicating investment funds and mandates seems unstoppable. Worldwide assets in exchange-traded funds (ETFs), most of which track indexes, hit $4 trillion in May 2017, having topped the $3 trillion mark only a year earlier.

Passive funds’ share of the money managed in US equities is now around 40%, more than double the level of a decade earlier (see figure 1).

Such inexorable growth, though, brings questions about indexing’s inherent vulnerabilities. The volumes of

To continue reading...

You must be signed in to use this feature.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: