He argues that passive investing, particularly in index funds, has led to a decrease in market liquidity. Furthermore, he asserts that passive investing has also contributed to a decline in active fund managers’ performance. Here, we will delve deeper into the arguments of Tom Stevenson, and explore how passive investing, index funds, and market liquidity impact investor decisions and market dynamics.

Are ETFs following? A new generation of actively managed exchange-traded funds (ETFs) is trying to do just that, says The Economist. Inflows into “active” ETFs have surged from less than $5 billion in 2019 to over $100 billion last year. Investors should be wary. ETFs have revolutionised markets. Subscribe to MoneyWeek Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE Get 6 issues free Sign up to Money Morning Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter Sign up

Active ETFs are a new type of exchange-traded fund (ETF) that aims to outperform the market by actively managing its underlying assets. They are designed to offer investors a way to gain exposure to specific sectors or asset classes without the complexities of traditional active funds. **Detailed Text:**

The rise of active ETFs has been a significant development in the world of investment.

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