Elon Musk and Cathie Wood knock passive index investing, stating it’s gone also considerably

Cathie Wooden, chief executive officer and chief investment officer, Ark Devote, gestures as she speaks throughout the Bitcoin 2022 Conference at Miami Seaside Conference Middle on April 7, 2022 in Miami, Florida.

Marco Bello | Getty Visuals

Elon Musk and Cathie Wood took intention at index money in a Twitter thread, arguing that passive investments have controlled too major a percentage of the stock sector.

The CEO of Tesla responded to a article by undertaking capitalist Marc Andreessen, who said huge asset professionals like BlackRock have outsized voting electricity in company The usa simply because of their significantly popular index money. Musk agreed with Andreessen, expressing passive investing “has gone also considerably.”

“Conclusions are currently being manufactured on behalf of true shareholders that are opposite to their interests! Significant difficulty with index/passive money,” Musk tweeted.

Ark Invest’s Wooden joined the discussion Wednesday, indicating investors in index resources like the S&P 500 ETF missed out on Tesla’s 400-fold appreciation in advance of it was additional to the fairness benchmark.

“In my check out, historical past will deem the accelerated shift towards passive funds in the course of the previous 20 years as a substantial misallocation of money,” Wood extra.

Wooden has turn out to be one particular of the most high-profile active supervisors on Wall Avenue. Her flagship Ark Innovation ETF, with Tesla as its most significant holding, has endured a brutal calendar year so considerably amid soaring rates, dropping approximately 45%.

Passive investments these types of as index money and trade-traded resources have taken up about 60% of the equity assets, stealing sector share from energetic rivals, in accordance to JPMorgan estimates. Money has flooded into passive solutions as buyers have been captivated by their reduced management fees throughout booming bull marketplaces. The sector for index resources has attained $6

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