The importance of passive investments continues to grow. They enable investors to invest quickly, cost-effectively, and supposedly without disadvantage in different asset classes, regions, or segments, even if underlying securities are not very liquid. However, their growing importance is leaving its mark on the behaviour of the overall market and individual securities. Passive investments are one of the drivers of the continuously changing market structure. With a focus on equities, we high-light the key implications of passive investing that investors need to be aware of. However, many findings also apply to bond markets. For active investors, this de-velopment also creates opportunities.
Authors
Ulrich Urbahn
Ulrich Urbahn is a CFA charterholder and, for many years, was part of one of the world’s top three multi-asset research teams in the renowned Extel survey. After earning degrees in economics and mathematics from Heidelberg University, he spent more than ten years at Commerzbank, where he worked, among other roles, as a Senior Cross-Asset Strategist. He has been with Berenberg since October 2017 and heads the Multi Asset Strategy & Research as well as the Portfolio Management Alternatives departments. In addition, he is a voting member of the Investment Committee and is responsible for capital markets communication.
Multi Asset Flexible
Benefit from a flexible multi-asset strategy with a focus on individual ideas. Strategic long-term positions in attractive capital market segments, especially niches, are supplemented by short-term oriented thematic as well as opportunity-driven positions. Investments are made across all asset classes and regions - deliberately detached from any benchmark and therefore, not based on pre-defined bandwidths for individual asset classes. On portfolio-level, a comprehensive risk overlay is applied on the basis of sensitivities to key risk factors.
