Economic implications of passive investing

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Show simple item record Woolley, PK Bird, R 2009-12-21T02:37:30Z 2003-01
dc.identifier.citation The Journal of Asset Management, 2003, 3 (4), pp. 303 - 312
dc.identifier.issn 1470-8272
dc.identifier.other C1 en_US
dc.description.abstract Index funds have grown significantly in recent years in most of the developed markets as investors have become less satisfied with the performance of active managers. Further, the flow of funds to passive investing has been supplemented by a high level of quasi-indexing undertaken by numerous active managers fuelled by their perception that they have to strictly control their tracking error relative to their given benchmark. The focus of this paper is on the economic implications of this major swing to passive investing. In particular, the paper highlights that (1) the assumed constraints on the growth in passive investing envisaged by writers such as Lorie and Hamilton (1973) is never likely to come into play; and (2) a high level of passive investing is likely to contribute to excessive and wasteful investment which results in lower economic growth and investor returns. This all suggests that although a heavy reliance on passive investing might appear rational for investors, it may well prove not only to be to their economic detriment but also that of the national economy
dc.format Scott McWhirter
dc.publisher Henry Stewart Publications
dc.relation.isbasedon 10.1057/palgrave.jam.2240084
dc.title Economic implications of passive investing
dc.type Journal Article
dc.parent The Journal of Asset Management
dc.journal.volume 4
dc.journal.volume 3
dc.journal.number 4 en_US
dc.publocation London, UK en_US
dc.identifier.startpage 303 en_US
dc.identifier.endpage 312 en_US BUS.School of Finance and Economics en_US
dc.conference Verified OK en_US
dc.for 150201 Finance
dc.personcode 981118
dc.personcode 110502
dc.percentage 100 en_US Finance en_US
dc.classification.type FOR-08 en_US
dc.description.keywords index investing, quasi-index investing, efficient markets, economic implications en_US
pubs.embargo.period Not known
pubs.organisational-group /University of Technology Sydney
pubs.organisational-group /University of Technology Sydney/Faculty of Business
pubs.organisational-group /University of Technology Sydney/Faculty of Business/Finance
pubs.organisational-group /University of Technology Sydney/Strength - Quantitative Finance
utslib.copyright.status Closed Access 2015-04-15 12:17:09.805752+10
utslib.collection.history Closed (ID: 3)

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