What Is Passive Capital Allocation?

The retail side has become increasingly passive as 401ks and IRAs have been encouraged to guide their clients towards low cost indexing. But this happened a long time before and has reached much greater penetration in the institutional space. So all of these strategies incorporate passive components to them that will then extend further into all the variable annuity products, most insurance products, et cetera. And so the passive exposure in the market on my calculations has gone from less than 1% in the early 1990s to today it's somewhere in excess of 45%.

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