Key research takeaways
Passive Ownership Doesn’t Affect Performance: Contrary to concerns about inflated share prices, we found that stocks with lower passive ownership performed better long term than those favored by indexed strategies. Passive’s preferred S&P 500 stocks also had similar volatility to less-owned ones and an average valuation in line with the index at about 25x price-to-earnings.
Active Lags Even Amid Low Passive Ownership: Regardless of whether a global region has a high or low allocation to passive strategies, roughly 80% or more of active equity fund managers trail their benchmarks long term, indicating that the level of passive ownership likely isn’t driving underperformance.
`Passive’ Isn’t Always Passive: Passive fund assets exceed actively managed, but the number overstates the impact, since a significant amount of the former are in quasi-active strategies. Even some passive indexes, including the S&P 500, have active characteristics, such as an asset threshold or a selection committee.
Nvidia’s Eye Test: As a member of the S&P 500 since 2001, Nvidia’s recent ascent to one of the world’s most held stocks, while dramatically outperforming the index, shows that active stock pickers and managers are still in control of price direction.
Already a customer? Access the full report here.
Not a terminal user? Click here to learn more.
Disclosure
This is a synopsis of the full report. The data included in these materials are for illustrative purposes only. The BLOOMBERG TERMINAL service and Bloomberg data products (the “Services”) are owned and distributed by Bloomberg Finance L.P. (“BFLP”) except (i) in Argentina, Australia and certain jurisdictions in the Pacific Islands, Bermuda, China, India, Japan, Korea and New Zealand, where Bloomberg L.P. and its subsidiaries (“BLP”) distribute these products, and (ii) in Singapore and the jurisdictions serviced by Bloomberg’s Singapore office, where a subsidiary of BFLP distributes these products. BLP provides BFLP and its subsidiaries with global marketing and operational support and service. Certain features, functions, products and services are available only to sophisticated investors and only where permitted. BFLP, BLP and their affiliates do not guarantee the accuracy of prices or other information in the Services. Nothing in the Services shall constitute or be construed as an offering of financial instruments by BFLP, BLP or their affiliates, or as investment advice or recommendations by BFLP, BLP or their affiliates of an investment strategy or whether or not to “buy”, “sell” or “hold” an investment. Information available via the Services should not be considered as information sufficient upon which to base an investment decision. The following are trademarks and service marks of BFLP, a Delaware limited partnership, or its subsidiaries: BLOOMBERG, BLOOMBERG ANYWHERE, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG PROFESSIONAL, BLOOMBERG TERMINAL and BLOOMBERG.COM. Absence of any trademark or service mark from this list does not waive Bloomberg’s intellectual property rights in that name, mark or logo. All rights reserved. © 2025 Bloomberg.
![[Interview] Joseph Rallo, Co-Founder Of EF Hutton](https://homebizgenius.com/wp-content/uploads/2025/02/Interview-Joseph-Rallo-Co-Founder-Of-EF-Hutton.jpg)
