Being A Passive Investor Has Never Been So Risky

Posted by Bryce Coward, CFA

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Our friends over at Integrated Wealth Management thought our readers would enjoy this article. ~Ed “Going forward, active management of portfolios versus passive index investing in ETF’s will be more important than ever because market weighted indexes are too overweight in tech, those tech stocks are at high historical valuations and a rising interest rate environment will impact these stocks. So good stock selection will pay off for investors.” ~Andrew Ruhland, Integrated Wealth Management.

It’s no secret that money has poured into passive equity vehicles as investors seek low fees above all else. To date, that has worked out just fine since equity indexes have compounded their returns at acceptable, if not above average, rates of returns. But, the world is different now than it was 10 years ago, and the low-cost advantage of passive investing may now be outweighed by its risks.

In this quick post we’ll address three risks to passive investing that together suggest the riskiness of this strategy may well be the highest it has ever been. Click here to read more.