Much like robo advisors have done in the area of wealth management, passive asset management and the products associated with it are gaining in popularity among investors, putting further pressure on active managers to beat the market and generate coveted alpha. $1.06 trillion departed active U.S. equities over the past five years ending Q1 2016, while $38.7 billion entered passive ones.
Furthermore, a Boston Consulting Group report stated that passive products will comprise 42 percent of institutional and retail strategies by 2020. The attraction of low-cost index products among investors and large firms is understandable in an age of lower returns, macro volatility, and strong regulations, with both looking for a stable long-term growth strategy.
