Active fund managers and the rise of passive investing: Epistemic opportunism in financial markets

Millo, Yuval; Spence, Crawford; Valentine, James J.

doi:10.1080/03085147.2023.2172252

Cited by 2 publications

(1 citation statement)

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“…The assumption is that business will be a force for good when the interests of principal and agents are aligned. Yet as we outlined above, the Responsible Research in Business and Management literature argues that predominant economic and finance theory is flawed and at least partially to blame for the challenges we face (Davis, 2020; Millo, Spence and Valentine, 2023).…”

Section: Introductionmentioning

confidence: 99%

Reimagining Business and Management as a Force for Good

McPhail,

Kafouros,

McKiernan

et al. 2024

British J of Management

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The literature has called on business and management scholars to help understand the global challenges we face and to find solutions. The prevailing narratives that have implicitly informed our understanding of business and management knowledge and practice as good need to be reimagined. We question whether our existing theoretical lenses, along with fundamental underlying assumptions about what constitutes labour, value and its creation, and the nature of assets, liabilities and materiality, act as a barrier to advancing business and management practice as a force for good and explore whether we need to go beyond applying existing theory to new research questions. Both Agency Theory and Stakeholder Theory have proven ineffective in aligning social and economic interests, while our disciplinary and publishing customs constrain our imagination and impede conceptions of fundamentally new ways of practising business. We explore why we need to reimagine business and management; what we mean by reimagining business and management and what it means to be a force for good. We conclude that if the purpose of business needs to be reimagined, business schools will also need to change to be major catalysts in this process.

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Section: Introductionmentioning

confidence: 99%

Reimagining Business and Management as a Force for Good

McPhail,

Kafouros,

McKiernan

et al. 2024

British J of Management

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Contrasting the Performance of Active and Passive Unit Trusts under Normal Market Conditions: Is the Experience of Emerging Markets Different?

Gopane,

Ravhura

2024

OMEE

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The predominant tradition in the literature is to scrutinise the competitive performance of passive and active investment strategies with less regard to the prevailing market climate. The thesis of this paper is that volatile market conditions may necessitate investment strategy adjustments. Such readjustments may confound empirical comparison of passive and active investing if econometric models do not adapt accordingly. Currently, the literature cannot give a stylised fact of whether the historical claims of passive–active relationships relate to normal market conditions or not, which is a flaw. The present study reduces the flagged knowledge gap by answering the question whether passive investment outperforms active investing under normal market conditions. The study applies the parametric and non-parametric risk-adjusted models of the Jensen alpha and Sharpe index. The empirical analysis is based on the weekly returns of 16 unit trusts listed on South Africa’s Johannesburg Stock Exchange for ten years (between 2009 and 2019). Consistent with the hypothesis of inefficient capital markets in developing economies, the study finds that active investing significantly outperforms passive investment strategy under normal market conditions. The results should benefit investors and policymakers in the era of increasing competitiveness, digitalisation, and globalisation.

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Active fund managers and the rise of passive investing: Epistemic opportunism in financial markets

Cited by 2 publications

References 30 publications

Reimagining Business and Management as a Force for Good

Reimagining Business and Management as a Force for Good

Contrasting the Performance of Active and Passive Unit Trusts under Normal Market Conditions: Is the Experience of Emerging Markets Different?

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