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Friend or foe? The remarkable growth of passive investing

By: Mary Fjelstad, senior research analyst

The passive market share of US equities has increased from just 12% in 1998 to 46% at the end of 2016. ETFs have been an important component of this growth, representing just 4% of the passive market at the beginning of the period to approximately 40% in 2016. We look at the potential benefits and disadvantages this growth might present to the market and the economy overall.