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Why passive strategy is so popular?

Legendary investor Jack Bogle believes that the market is no longer a situation that could be described as "market discerning buyer a piece" - for AMarkets materials.




That is, the stock market is no longer feasible for competent analysis and buy the paper on the basis of forecast profits of the issuing company. Institutional players -. Banks, hedge funds, etc., they are also the investment trendsetters - increasingly constitute investment portfolios, focusing on the dynamics of a group of assets, asset class. The dynamics of a single paper within the group / segment is almost not considered. According to Bogle, the current market situation is just depressing. Dynamics of dividend payments is flat. Indicators P / E higher. Profits of companies also do not have good speakers.


The market is delineated trend - private investors who prefer to have their money managed other things are not often willing to communicate with actively managed and are increasingly choosing the passive, the most automated strategies.

ETF with passive strategies are much more popular than mutual investment funds where portfolio managers manage a pool of investments in the traditionally active mode:

Why passive strategies are gaining increasingly popular? First, passive management - it is always much lower commission. In the space of a minimum yield is a very strong argument. Second - investors are increasingly aware that the market is becoming less and less marketable. From the intelligence and experience of a single investment manager has little depends. Balsam ruled by officials from the central banks.



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