The rise of the passives looks unstoppable. Since 2008, assets in exchange-traded funds have increased from $772bn (€685bn) to almost $4trn, according to BlackRock. But this doesn’t mean active managers are cornered.
It is no secret the average active fund manager struggles to outperform consistently. Corporate governance is an obvious area where active managers can still prove their value.
Ricardo Libano, a fund selector at the Portuguese wealth manager IM Gestão de Ativos in Lisbon, has a natural inclination to invest in active funds. But it’s not always easy to do so, and sometimes he is left little choice but to select a passive option.
The largest ETF available to European investors has passed the $20bn mark in assets under administration. It benefited from an increase in inflows following Donald Trump’s election to the US presidency.
Talk of a 0% fee for passive investing is an enticing prospect, but as core funds become cheaper so groups are encouraged to over-complicate the satellite.
The pace of inflows into index-trackers shows no sign of abating. With still three months to go this year, ETFs listed in Europe have already surpassed the previous inflows record set in 2014.
European ETF assets have more than doubled over the last five years, according to a study by Morningstar.
ETFs and ETPs listed in Europe received net inflows of US$5.4 billion in January 2014, with investors showing a marked preference for equity funds, according to the latest ETFGI Global ETF and ETP industry insights report
Swedish fund selectors are still showing a marked preference for active strategies with a value approach across all geographies.