The investment into passive vehicles will continue to rise for the reasons cited in this article. The other trend is the investment of passive vehicles in an active manner. This allows participants to receive an allocation of low cost investments based on their risk preference in one vehicle. Unlike traditional balanced accounts and target date funds, these allocations can be tactically managed so that losses are kept low in bear markets and participants will stay invested in the market. These allocations are available on investment platforms such as Envestnet, Placemark, Folio, or as collective investment funds through custodians. But again, the cost of allocation management needs to be scrutinized so that the gains being received by owning passive instruments are not negated by high cost allocation management fees.
Passive investing has become much more popular over the last decade. According to data from Thomas Reuters, the ETF market is growing by nearly 30% a year. In addition, interest in EFTs and other passive investing options is expected to continue to grow rapidly for the foreseeable future.
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