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Podcast: Excess Returns
Episode: Are Flows Into The S&P 500 And Other Passive Indexes Distorting The Market?
Description: There is little disagreement among market observers that passive investing is growing. There is also little dispute that the trend is likely to continue as a result of the rise of ETFs, investors’ focus on fees, the inconsistency of active manager outperformance, and numerous other factors. That is where the agreement ends, though. There are substantial disagreements as to if there has been an impact on the pricing of securities within the market, and if so, what that impact is.
There are two ways that some argue that the rise of passive investing is influencing the market. Th...