The Practical Implications of the Rise of Passive Investing | Mike Green

In this episode, we are joined by Simplify Asset Management's Mike Green. We build on our previous episodes with Mike where we discussed his research on the impact of passive investing on the market and focus on its practical implications and how it impacts how investors construct their portfolios. We discuss the types of equity strategies that would benefit the most from the rise of passive, whether a factor could be constructed based on Mike's research, different strategies that might hedge a potential market decline triggered by passive and a lot more.

00:00:00 - Intro
00:01:47 - Summary of Mike's work on passive investing
00:05:43 - Discussion of practical implications for individual investors
00:08:17 - Analysis of portfolio protection strategies and hedging
00:11:37 - Discussion of creating a factor-based approach to passive flows
00:15:38 - Explanation of market elasticity and Haddad's research
00:21:31 - Discussion of passive investing becoming a monopoly
00:24:41 - Analysis of portfolio diversification beyond stocks and bonds
00:28:06 - Examination of passive's impact on bond markets
00:31:26 - Discussion of potential warning signs and end game scenarios
00:35:16 - Analysis of whether a bear market could change passive dynamics
00:38:37 - Discussion of returning to fundamentals-based investing
00:42:36 - Analysis of regulatory changes and QDIA impact
00:45:28 - Summary of Mike's overall perspective
00:46:47 - Final thoughts on market distribution changes

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