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The rise of passive ownership across the S&P 500 and its impact on company valuation and performance
During the past decade, passive equity mutual funds and ETFs have seen $2.8 trillion of inflows compared with $3.0 trillion of cumulative outflows from actively-managed funds. Alongside passive equity inflows, the share of passive ownership for the typical S&P 500 firm has also increased, rising from 18% two decades ago to 26% today. The intensity of passive ownership within the S&P 500 varies across sectors and across market cap. For stock pickers the share of passive ownership of a company is much less important for valuation multiples than fundamental attributes. Stocks with the highest share of passive ownership have not consistently outperformed stocks with the lowest share.
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