Peter Bernstein

A private investment company located in Geelong, Victoria

Are Index Funds Creating a Bubble?

A seismic shift of capital - from active to passive - has eviscerated financial markets. The trend is no more obvious than in a widespread uptake of Exchange Traded Funds (ETF). The topic for consideration is whether ETFs make financial markets more or less efficient. Do they improve our ability to access market returns, or encourage undue risky behaviour? Perhaps, even, a new financial bubble? To jump to the punch line, ETFs are less a cause of irrational exuberance, than a…