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The Shift from Active to Passive Retail Investing

Guojie  Ni


This paper discusses the origins of passive investing and the growth of passive investing at the expense of active investing. The paper notes how the shift from active to passive investing benefitted the growth of middle class financial wealth amid a transition from defined benefit to defined contribution retirement plans. This growth in passive investment also sparked concerns among investors about the concentration in ownership and the lack of firm-specific  information in equity markets. The paper concludes by discussing the continued advancement of retail trading through creations like robo-advisors and low-fee trading platforms.


Equity Investment; Retail Trading; Passive Ownership; Active Ownership; Robo-Advising

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DOI: http://dx.doi.org/10.18686/fm.v7i3.5383