3min chapter

Flirting with Models cover image

Liquidity Cascades

Flirting with Models

CHAPTER

The Second Influence of Active Investing

The second influence occurs when investors move from active into passive mandates. In doing so, they must buy to cover their implicit active bets. As the largest names become a larger part of the passive index, these active strategies become more under weight. This value proxy is not the only strategy antially underweight mega cap names.

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