Fast reading
- In both developed and emerging markets, passive inflows have been consistently positive, and the trend appears to be accelerating. By design, stocks selected by active managers are ‘pounced upon’ by cash-flush passive investors driving the price of these popular stocks up further.
- However, we believe that the market’s heavy tilt towards momentum investing – led by ETFs – is leading to divergences between price and value that, for many stocks, has become untenable.
- At some point, the valuations of most overstretched momentum stocks will fall – as they are aggressively sold by active investors at a faster rate than they are being bought by the follow-on passive investor base. In this letter, we consider how the momentum trade might unravel.
Asia ex-Japan Equity: Letter to Investors 2025
For further insights on Asia ex-Japan Equity.
Share:
BD015236
