Numerous factors have been driving the development of passively managed vehicles and their increasing weight in institutional investors’ portfolios. In particular, a recent PwC study showed that the weight of passive investments in global pension funds’ portfolios grew from 19% in 2017 to 25% in 20201.
Key benefits are that their performance (relative to their reference index) is highly predictable, their costs are typically lower than those of actively managed vehicles, and the range of available instruments has increased considerably in terms of geography, sector, investment theme and type of index. Furthermore, the growth of smart beta indices has offset significantly the inefficiency of conventional capitalisation-weighted indices and expanded the opportunities to customise the implementation of a given strategy.
You can now read the full whitepaper at the link below