[0xffff2]

Way outside of my area of expertise, but a quick search suggests that exact numbers probably depend on exactly how you define the question, but it would be broadly reasonable to say that the balance is about 50/50 +/-5%, and trending towards the passive side over time.

Would you agree with that?

[JumpCrisscross]

Yes. But I’d caution to not conflating passive investing with indexing to a popular index. They sound similar. But most passive assets index to one of a variety of indices, many of them built in-house by various asset managers. (Vanguard, for example, is famous for doing this.)

[worik]

Yes.

And just because yesterday's rules were "invest in S&P500" does not mean the governors of many (not all) funds cannot change the rules to dodge such blatant fraud

The managers of huge funds are not complete idiots- far from it- and they will do what they can, most of them, to fulfill their duties

[JumpCrisscross]

> just because yesterday's rules were "invest in S&P500" does not mean the governors of many (not all) funds cannot change the rules to dodge such blatant fraud

There are no governors. The assets that automatically follow the S&P 500 are like individual IRAs. If a fund has a governing body, they're generally not indexing to a single narrow index like the S&P 500. They're going for a set of total-market funds, or they're building a custom benchmark.

For the assets that do follow the S&P 500, virtually nbody would be expected to react to these kinds of rule changes. If anything, you'd just create a higher-fee fund that anyone who is upset about this can switch into that equal weights or won't include SpaceX. This is what some RIAs I know in the Bay Area have done, and this entire shitshow has just been a moneymaker for them.

> managers of huge funds are not complete idiots

Zero hedge funds automatically follow the S&P 500, or any other public index, like that. That's sort of the point of being a hedge fund–you're delivering something different.

[worik]

I said and I mean "huge", as in "very big"

Passive index investing was once the best strategy, perhaps is still. But in the face of such apparent malfeasance perhaps no longer

The big pension funds do have governors, they are mostly diligent and can change course

that will mitigate but not eliminate the downsides to this nonsense

[l23k4]

> But in the face of such apparent malfeasance perhaps no longer

Do you have any sources to share in support of this claim of malfeasance?

[worik]

> Do you have any sources to share in support of this claim of malfeasance?

Not here, this is a casual discussion not a scientific seminar.

But use Occam's Razor and modern history

Point 1. Corruption has penetrated the highest echelons of USAnian politics. The president is unabashed in his corruption and has corrupted (is corrupting) the financial regulators (I follow Molly White who has been particularly good on this)

Point 2. Space-X is valuing itself at an astonishing value that is not anchored in its business activities. This has been covered a lot in comments here but also see Patrick Boyle's excellent commentary.

Point 3. The purveyors of these IPOs have been doing their best to get the rules changed (because reasons blah blah blah), the change will mean that managed funds, if they follow their usual practice, will feel compelled to buy in at the offer price - a massive inflow of capital that will make many people incredibly rich.

Putting all this together - a culture of corruption that has reached the pinnacles of the financial system, outrageous valuations and open conspiring to change the rules in favour of the whole scheme leads me to the conclusion that I am looking at the biggest (what is effectively the) fraud in history

I hedge my comments "effectively the" as I cannot be sure that this is conscious theft, or whether it is a confluence of powerful people facing juicy incentives who going with the flow are heading to a massive wealth transfer from working people (via pension funds) to elite capitalists

I do not think that this is not apparent to the governors of these huge pension funds. Those that have not tied themselves to an index following strategy will opt out I am sure - they are smart, studious and dutiful people by and large. So the people perpetuating this fraud may well be unable to pull it off.

But these are very worrying times. Especially for the USA.