Many mutual fund professionals at firms dominated by actively managed funds are investing a decent chunk of their personal assets in ETFs and other indexed products, according to a poll.
“Two-thirds of mutual fund professionals polled by Ignites have a meaningful portion of their investments managed passively, including 45% who say they have a ‘significant’ portion in passive products. Another 22% report having a ‘moderate’ amount of their investments managed passively,” reports Danielle Sottosanti at the Financial Times website.
John Rekenthaler, vice-president of research at Morningstar, in the FT report said it’s telling how many fund professionals have a meaningful exposure to passive products.
“Probably two-thirds of their companies also offer an index fund of some type. But in most cases not enthusiastically, nor do those funds have many assets,” Rekenthaler said. “It appears that about half of fund professionals are eating rather differently than the diets prescribed by their companies.”
“Industry experts are not surprised that fund professionals are investing their personal assets in passive products, even though these same fund professionals may advocate active management,” Sottosanti reports.
“The perception of index investing has improved greatly over the past 15 years,” said Doug Dannemiller, principal at research consultancy Dannemiller Analytics & Consulting, in the story. “Active funds have the potential for alpha, but many funds don’t actually beat their index, providing negative alpha.”