View more on these topics

Vanguard stake in S&P prompts warning for active funds

Vanguard has doubled its stake in the S&P 500 since 2010, prompting a warning for active managers in a new report out Bank of America Merrill Lynch.

The passives giant holds 6.8 per cent of the US index and has more than a 5 per cent stake in 491 of its constituents.

In 2010 Vanguard passed this threshold in 116 companies and held 3.3 per cent of the index.

The BAML report called “The ETF-ization of the S&P 500” warns US managers Japan-focussed active funds have taken a hit as passives take over the market.

Passives now account for 70 per cent of AUM held in Japan equity funds, but active funds outperformance has fallen 12 percentage points compared to the prior decade’s average.

The BAML report also warns ETF fads have driven massive distortions in price to earnings ratios, recently seen in low volatility stocks – an area where ETFs have seen 150 per cent annualised growth since 2010.

It expects value, environmental, social and governance and short-term quantitative strategies could become the next fads.



Paul Lewis: Scrap National Insurance contributions

Is it time to scrap the National Insurance fund? Despite its name, it is not a fund and it is not insurance, though a fiction is carefully woven around it to make it appear as if it is both. Its very name is misleading. The word “fund” makes people think of a pot of money […]

gold bars and coins

Falling stars: Big-name managers lose their shine

Star fund managers are becoming less important for advisers as DFMs and a team-based approach to investment management grow more dominant. Consolidation and the rise of passive investing have pushed some big names in the fund management industry to set up boutique firms in recent years. Experts argue the status of long-standing star managers is […]

Health services

Challenges and opportunities

By Sarah Scott, marketing consultant On 22 February this year the charity Diabetes UK launched a fundraising initiative, #Swim22. They challenged individuals to swim 22 miles over the course of 89 days – a distance that equates to the width of the English Channel. Because of the time period the challenge is spread over, it […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment