Are Index Funds Eating the World?

Re:Are Index Funds Eating the World? by blazespin on Friday August 26, 2016 @04:33PM (#12369113)

Not really. If Index funds become more popular than regular trading becomes more profitable. The opposite of what you say is actually true.

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Re:Are Index Funds Eating the World? by smallnamespace on Friday August 26, 2016 @04:41PM (#12369152)

It may make regular trading more profitable, but most asset managers are paid for getting more assets under management, not their fund's profits.

So siphoning money away to index funds does put a direct crimp on active managed fund managers' compensation.

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Re:Are Index Funds Eating the World? by mysterypie on Saturday August 27, 2016 @05:02AM (#12371634)

> asset managers are paid for getting more assets under management, not their fund's profits.

I've always wondered why they aren't paid a percentage of profits? That would align their interests with the customers'.

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Re:Are Index Funds Eating the World? by OscarCunningham on Saturday August 27, 2016 @05:35AM (#12371695)

They're generally paid both. They often charge "two and twenty" meaning 2% yearly of the assets under management and 20% of the profit. (Of course they don't absorb 20% of the losses in a bad year)

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Re:Are Index Funds Eating the World? by smallnamespace on Saturday August 27, 2016 @08:56AM (#12372157)

That's only hedge funds, which are a small fraction of total fund capitalization.

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Re:Are Index Funds Eating the World? by OscarCunningham on Saturday August 27, 2016 @07:15PM (#12374604)

What are the percentages of the market occupied by different fund types? Where would I go to look that up?

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Re:Are Index Funds Eating the World? by smallnamespace on Sunday August 28, 2016 @11:54AM (#12376989)

http://www.hedgefundfacts.org/hedge/wp-content/uploads/2009/...

Page 4

"Hedge funds as a percent of total: 1.1%"

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Re:Are Index Funds Eating the World? by janpieterz on Saturday August 27, 2016 @01:09PM (#12373191)

Or even a percentage that increases by the percentage of profit.

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Re:Are Index Funds Eating the World? by hx87 on Friday August 26, 2016 @05:02PM (#12369281)

If you trade with your own (possibly leveraged) funds, sure. If you're trading with other people's money and rely more on asset management fees than profit-sharing, then your personal expected profits fall when index funds become more popular.

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Re:Are Index Funds Eating the World? by swolchok on Friday August 26, 2016 @04:43PM (#12369167)

However, running a consumer-facing actively managed fund and taking a percentage fee becomes less profitable if demand shifts from that product to index funds, because there is less money to take a percentage fee out of.

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Re:Are Index Funds Eating the World? by Tushon on Friday August 26, 2016 @04:42PM (#12369162)

Not really. The "who stands to lose" is money managers/financial advisers, assuming they don't want to become a trader or fund manager.

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