Small logo Subscribe to leading news on impact investing. Learn More
The Brief Originals Dealflow Signals The Impact Alpha Impact Voices Podcasts Agents of Impact Open
What's Next Capital on the Frontier Measure Better Investing in Racial Equity Beyond Trade-offs Impact en las Americas New Revivalists
Local and Inclusive Climate Finance Catalytic Capital Frontier Finance Best Practices Geographies
Slack Agent of Impact Calls Events Contribute
The Archive ImpactSpace The Accelerator Selection Tool Network Map
About Us FAQ Calendar Pricing and Payment Policy Privacy Policy Terms of Service Agreement Contact Us
Locavesting Entrepreneurship Gender Smart Return on Inclusion Good Jobs Creative economy Opportunity Zones Investing in place Housing New Schooled Well Being People on the Move Faith and investing Inclusive Fintech
Clean Energy Farmer Finance Soil Wealth Conservation Finance Financing Fish
Innovative Finance
Personal Finance Impact Management
Africa Asia Europe Latin America Middle East Oceania/Australia China Canada India United Kingdom United States
Subscribe
Features
Series
Themes
Community
Data
Subscribe Log In
More

Will impact investing be passive investing in 2030?



“Both large and small investors should stick with low-cost index funds,” wrote Warren Buffett in his annual letter to Berkshire Hathaway shareholders. It seems people are heeding his advice.

Passive investment funds — ones that track stock market indices — could own the whole U.S. stock market by 2030 if the current rate of growth continues. Today, about 30% of U.S. assets and 40% of U.S. stocks are held in such funds.

Passive funds like Vanguard, which are managed by rules-based algorithms, are on the rise because they have lower fees than active money managers and may be outperforming them as well. The algorithms also make possible rules around sustainable or responsible investing.

Platforms like OpenInvest and Motif are expanding socially- and environmentally-minded stock screening and thematic investing for people investing as little as a few thousand dollars. Journalist Marc Gunther has made a case for why foundations should switch to passive investing as well: it would free up capital for core program that is currently used to pay money managers.

How will the algorithms hold corporate management to account? Large asset managers like BlackRock and State Street have become outspoken champions of shareholder engagement as a catalyst for corporate governance improvement and long-term thinking.

Passive fund managers could become more active. Vanguard reportedly voted against ExxonMobil’s management in urging the oil giant to report its long-term risks from climate change and climate action.

You might also like...