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Passive reign

For the first time in history, passive investing has taken over active in terms of Assets under Management. As you can see below, actively managed funds have been losing assets continuously since 2009, where they had 80% market share. With a market that has moved on a straight line for years due to the Fed’s QE program, investors have decided to switch to passive and mirror an index. Interestingly enough, however, during 2023, and according to BoA research, investors have bought more single stocks than ETFs, with a huge concentration in Tech. It would appear that investors want to have inexpensive exposure to the broad market, and a active management approach with direct exposure to the #magnificent7, as opposed to a well diversified, professionally managed active fund, probably because it’s currently underperforming. Complacency and overconfidence are rising.

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