The polarization and distinction between Passive and Active management seems to be narrowing. The Active guys realize that they must look at some sort of tech, and the Passive guys realize that life is more than just numbers. Smart Beta is that halfway house, but isn’t that a hybrid sort of value investing? Smart Beta funds have recorded huge growth and are on course to hit $1tn in assets by the end of 2017.
Let’s take a step back. On the face of it, it seems difficult not to get wrapped up in it all. Machines are doing what we do a lot quicker and cheaper with better returns. The natural inclination is to get on board, and quick! Passive investing is getting the popular vote. Through the first five months of this year, investors steered $338 billion into passive mutual funds and ETFs – that’s on top of last year’s record inflows of $506 billion, according to Morningstar. Active funds still manage more assets though.