The consensus is assets are shifting from active to passive. I know Vanguard has a bunch of passive funds that, for example, track the S&P500. They charge a small fee.
Seeing as these are mainly done by algorithms, who is getting paid when the fees continue to shift?
| +29 | What is Asset Management? | 3 | 2w | |
| +25 | Scam - Remote Equity Analyst Role at Top LO | 7 | 2d | |
| +20 | Workplace bullying or totally normal | 17 | 5d | |
| +18 | Breaking into LO AM from FP&A... | 4 | 3d | |
| +18 | Portfolio Associate Interview - Need advice! | 1 | 1w | |
| +17 | BlackRock 2025 SA | 29 | 4d | |
| Am I cooked? | 6 | 2w | ||
| Equity Research at Bank vs IG, High Yield & Leveraged Loans Research at Asset Manager | 11 | 2w | ||
| +15 | How to not be mentally drained by this job? | 4 | 6d | |
| +13 | Do LO invest in businesses or stocks? | 3 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Passive fund management fees are paid to the company managing the fund. There are portfolio managers who are responsible for minimizing tracking error to the benchmark, trading costs, and determining the best way to replicate the index performance, as it is not possible to perfectly replicate the performance of the index. For example, if you're running an S&P 500 fund, do you need to hold all 500 names? Or would holding 100 of the 500 names give you pretty much the same results, but reduce the trading costs to the investors? What should you do if the fund is big, and you can't buy a certain name in one day without pushing up the price a lot vs the last index print? What combination of securities can be allowed for a create or redemption basket each day? These are the sorts of decisions passive managers may consider.
I see, thank you.
Qui neque quis id corrupti vitae nemo. Et sequi nisi dolorem ullam. Fuga ut veritatis est ratione eligendi et iste qui. Cumque repellat possimus harum eveniet error occaecati facilis quasi.
Nihil amet quis quis ratione culpa molestias. Ea sint iste qui placeat dolor optio vel. Adipisci aut incidunt sed harum eius sit voluptatum. Magni ad consectetur non repellendus quaerat.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...