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  • FIRST POST
    • JustAnotherSaver
    • By JustAnotherSaver 12th Sep 17, 8:52 PM
    • 2,337Posts
    • 360Thanks
    JustAnotherSaver
    Index trackers
    • #1
    • 12th Sep 17, 8:52 PM
    Index trackers 12th Sep 17 at 8:52 PM
    Just one for curiosity more than anything.

    I'm doing some more reading at the moment & it seems to be turning out as another thumbs up for index trackers, passive investing. I didn't intentionally go out to read something that had that viewpoint btw.

    Anyway, if absolutely everybody started buying in to index trackers rather than managed funds, what impact if any would this have on everyone?

    If everything you read seems to be swaying the newcomer towards index trackers then i'm only guessing that it's just a matter of time before it'd become a bit saturated that way, no?

Page 1
    • dividendhero
    • By dividendhero 12th Sep 17, 9:38 PM
    • 96 Posts
    • 69 Thanks
    dividendhero
    • #2
    • 12th Sep 17, 9:38 PM
    • #2
    • 12th Sep 17, 9:38 PM

    Anyway, if absolutely everybody started buying in to index trackers rather than managed funds, what impact if any would this have on everyone?
    Originally posted by JustAnotherSaver
    If everyone went passive, there wouldn't be a market!
    • Alexland
    • By Alexland 12th Sep 17, 10:02 PM
    • 247 Posts
    • 128 Thanks
    Alexland
    • #3
    • 12th Sep 17, 10:02 PM
    • #3
    • 12th Sep 17, 10:02 PM
    Trackers trade infrequently so despite their market share are only a small proportion of trades that set prices.
    • Linton
    • By Linton 12th Sep 17, 10:08 PM
    • 8,207 Posts
    • 8,080 Thanks
    Linton
    • #4
    • 12th Sep 17, 10:08 PM
    • #4
    • 12th Sep 17, 10:08 PM
    And small private investors who are the customers for trackers are a relatively small part of the global equity market.
    • bostonerimus
    • By bostonerimus 12th Sep 17, 10:17 PM
    • 873 Posts
    • 441 Thanks
    bostonerimus
    • #5
    • 12th Sep 17, 10:17 PM
    • #5
    • 12th Sep 17, 10:17 PM
    And small private investors who are the customers for trackers are a relatively small part of the global equity market.
    Originally posted by Linton
    Institutional investors.....at least in the USA......are increasingly using trackers. I just hope there continue to be enough people that buy trackers and active traders to keep the market efficient and my tracker approach ticking along.
    Misanthrope in search of similar for mutual loathing
    • Malthusian
    • By Malthusian 13th Sep 17, 10:30 AM
    • 2,884 Posts
    • 4,126 Thanks
    Malthusian
    • #6
    • 13th Sep 17, 10:30 AM
    • #6
    • 13th Sep 17, 10:30 AM
    If everyone went passive, there wouldn't be a market!
    Originally posted by dividendhero
    A myth. There would still be mergers & acquisitions. Directors and employees would still be rewarded with share options in a particular company. Some passive investors would buy passive funds focusing on high-yielding shares, others would buy passive funds focusing on the smaller end of the market to focus on growth, while others would buy "smart beta".

    As has been noted on this board many times, there is no such thing as just "going passive" - there is always a management decision. Even putting all your money in the FTSE World is a management decision. If everyone goes passive they will still be making different management decisions, creating fluctuating demand for different types of shares (with different yields and risk profile). There will also be fluctuating supply due to IPOs, capital raises and debt issuances. There will therefore still be a market just as there is now.

    The idea that if "everyone went passive" every single market participant would want to buy the all-share index weighted by market cap, only there would be no all-share market-cap-weighted index to buy, is nonsense.
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