Moody's: Active management will 'shrink substantially' as passives popularity grows

In a new report Industry Flows Actively Moving to Passive, the firm found passive investments made up one-third of the US mutual fund market and this proportion is expected to grow further. This demand has been driven by the absolute underperformance of active managers versus their benchmarks in a variety of market conditions, as well as the high fees charged by active funds and new US regulation pushing for greater transparency on fees. Stephen Tu, a vice president and senior analyst at Moody's, said: "Under the new regulation, advisers are expected to ensure investments are in t...