THE PASSIVE BUBBLE IS NOT WHERE YOU THINK IT IS

The shift to passive is creating massive bubbles in the equity market. Because information-driven investors are overwhelmed by price-insensitive buyers, price no longer converges towards value.

1 – Vanguard, Blackrock, and StateStreet own a fifth of the U.S. stock market.

2 – REITs are the sector most over-owned by index fund; tech and the FAANGs are under-owned by index funds.

3 – Flows into tech ETFs have soared in the past two years, creating a demand glut for tech shares. 

4 – This big tech share shortage is being solved by massive option issuance. Eventually, the “passive bubble” should transfer wealth from index fund investors to tech employees and insiders.

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Vincent Deluard   




Vincent Deluard, CFA, is the newest member of the Market Intelligence team within the BD Division of INTL FCStone Financial Inc. A prolific market commentator who’s often quoted in the Financial TimesWall Street JournalBarronsReal Vision, and Reuters, Mr. Deluard earned the Euromoney Padraic Fallon Editorial Prize for his in-depth study of the investment opportunities offered by the European debt crisis in 2013. Prior to joining INTL FCStone Financial Inc., Vincent served as Europe Strategist for Ned Davis Research Group, where he authored weekly publications on European markets, and designed proprietary trading models that combined fundamental, technical and macro indicators to identify major investment themes and market trends.

Vice President – Global Macro Strategy

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