Active or passive management, an economic and moral choice

Published on November 4, 2024 at 10:39. / Modified on November 4, 2024 at 12:01.

It is established, the assets of passive management (15 trillion dollars) now exceed those of active management (14 trillion dollars). Passive management carries with it an oxymoron but that is not its greatest fault. The capture of savings by so-called passive management is contrary to economic, financial and moral logic.

Economically, it constitutes an obstacle to the proper allocation of capital. An economy in which (financial) resources are not directed towards the right jobs (investment needs of companies) will inexorably see its productivity gains limited and its growth potential diminished.

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