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Passive Investing’s Dark Side: Michael Green At ValueX BRK

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Predrag Shipov
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When time becomes a proxy for passive penetration Alpha vanishes for active management
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ValueX BRK was part of a series of events following the Berkshire Hathaway Shareholder Meeting. One of the panelists was Michael Green, a chief strategist and portfolio manager from Simplify Asset Management.

Simplify is an ETF firm, and the topic of Green’s presentation was the impact of passive investing on markets.

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Total Assets in Active and Passive MFs and ETFs

The Rise of Passive Investing

Green’s opening remark was that passive investing is viewed as a recommended investment and a good idea. However, what is great at a small scale can become dangerous when it becomes large scale. Green explained why Buffett’s approach to investing does not fit with the story he was about to present.

When Green started his investing journey at the beginning of the 1990s, passive investing had about 1% to 2% market share. Today, passive investing is approaching 50% market share, rising by 3% per year.

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