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This Article is From Feb 10, 2020

How the Rise of Passive Investing May Be Creating Huge Distortions in the Market

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Every week, hosts Joe Weisenthal and Tracy Alloway take you on a not-so-random walk through hot topics in markets, finance and economics.

Over the last decade or so, we've seen an incredible rise in so-called passive investing. While definitions differ over what this means, we've seen more and more money poured into index funds (which own every stock in a given basket). Meanwhile, money has been yanked away from money managers who attempt to select individual stocks. One school of thought argues that this is a positive, in part due to lower fees. But is there a dark side? On this week's episode, we speak to Mike Green of hedge fund Logica Capital, who argues that the trend is causing major market distortions that will eventually unwind with ugly consequences.

To contact the editor responsible for this story: Laura Carlson at lcarlson21@bloomberg.net

©2020 Bloomberg L.P.

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