I am eagerly looking forward to moderating tomorrow’s webinar, Indexing, from Evolution to Revolution, with finance reporter and author Robin Wigglesworth and Harvard Law Professor John Coates. Taking as a jumping-off point Robin’s recently-published history of the indexing revolution, Trillions (How a band of Wall Street renegades invented in index fund and changed finance forever), John and Robin will talk through some of wide-ranging implications of this tectonic shift in our industry.
The “passive versus active” shorthand that is often applied to this evolution is inadequate – and misleading.
Misleading, because while the first index fund was a truly “passive” investment, the products created since and those yet to come are not so simply characterized. Human judgment in decision making is part of many ETF products and, often, the indexes that underlie them. Active products, on the other hand, can more closely resemble the indexes they benchmark against than their labels would indicate.
Inadequate, because the consequences of the rise of indexing are not limited to the benefits of lower costs for investors of index products like ETFs and the challenges of those lower costs to the business models of investment firms. The increasing size and scale of the largest firms in asset management, product proliferation, increasing concentration of ownership, the role of index providers, market efficiency, what this means for corporate governance and the role regulation will play are all on the table. And, although this is not a sustainable investing event, ESG considerations are playing a role in these changes.
At our prep call last week, John, Robin and I talked for nearly an hour about these issues as we sketched out the topics in preparation for this event. Robin and John bring a wealth of experience that will make this a compelling conversation.
Robin served as the Financial Times’ US markets editor, spearheading its coverage of financial markets and asset management across the Americas, before assuming his current role as FT’s global finance correspondent where he covers the biggest trends reshaping markets, investing and finance around the world.
John is Professor of Law & Economics at Harvard Law School. He is a nationally recognized expert in corporate transactions, corporate control and governance, mergers and acquisitions (M&A), financial institutions, and securities. During the Presidential transition in 2021, John served as General Counsel and Acting Director of the Division of Corporation Finance at the SEC.
Please join us on March 15th at 12:00 noon for Indexing, from Evolution to Revolution, a CFA Society of Boston webinar.