Has Indexing Caused Us to Lose Sight of What Investing Really Is? | ETF Trends

By Sonya Dreizler via Iris.xyz

One of the benefits of using impact investing and ESG strategies with clients is that it allows clients to connect with their investments around more than just financial considerations. Is the appreciation of knowing what you own reflective of a larger trend?

Has the move toward indexing led us to lose sight of what investing really is?

Though index investing has taken off only in the past two decades, the rise of ETFs and indexing have been tremendously influential on the personal investing marketplace. As “owning the market” has become commonplace, I suspect investors (and professionals to some extent) have become somewhat detached from the act of investing.

Investing, in its most basic sense is taking a client’s money and giving it to a company in exchange for owning a percentage of that company. That company uses the invested money to fund any number of initiative, from new hires to research to marketing. The hope with each investment is that the company combines the invested capital with good business management to grow the value of the company and/ or pay dividends to the investors.

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