Paul Singer Says Passive Investing Is ‘Devouring Capitalism’

  • Hedge fund manager says index products harm growth creation
  • Singer’s main hedge fund gained 3.5% in the first half

Billionaire Paul Singer is warning of a growing and menacing threat: passive investing.

“Passive investing is in danger of devouring capitalism,” Singer wrote in his firm’s second-quarter letter dated July 27. “What may have been a clever idea in its infancy has grown into a blob which is destructive to the growth-creating and consensus-building prospects of free market capitalism.”

Almost $500 billion flowed from active to passive funds in the first half of 2017. The founder of Elliott Management Corp. contends that passive strategies, which buy a variety of securities to match the overall performance of an index, aren’t truly “investing” and that index fund providers don’t have incentive to push companies to change for the better and create shareholder value…

Paul Singer Says Passive Investing Is ‘Devouring Capitalism’

Categories : Finance

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