All strategies work – until they don’t. While the hottest ticket in town is still private credit, is it everything it’s cracked up to be?
In Cliff Asness’ latest missive, a fictional asset allocator from the future looks back on the decade to 2035 to figure out which assets helped their performance and which hurt it.
… as passive mandates expected to double by 2020
Passive investing is the fastest growing style of investing in the money management industry, according to London Stock Exchange Group, and is tipped to rise from 11 per cent of total funds in 2012 to 22 per cent in 2020.
At the LSE analyst briefing following the Russell takeover announcement on June 26, LSE chief financial officer, David Warren, said that the passive investment space was expected to grow at a compound rate of 18 per cent a year through to 2020 on a global basis.
A lot of this growth is from the retail sector, as ETFs continue their surge around the world. Most institutional investors, such as super funds, are probably close, on average, to the 22 per cent passive figure already.
In the institutional sector, any growth in passive investing is likely to come from the various “smart beta” strategies, which are being offered as an alternative to the traditional market-cap indices.
LSE, which owns the FTSE indices, is particularly strong in Europe and Asia and other emerging markets. It’s $4 trillion in assets benchmarked to its indices has a topline-growth profile of nearly 20 per cent compared with Russell’s 10 per cent.
This is largely because of the catch-up which occurred in European equity markets in the past few years and the stronger prospects for emerging markets, rather than mature markets like the US, generally.
