An article in The Financial Times shows the following statistics of mutual fund industry professionals who invest their own assets in low-cost passive vehicles, such as index funds and exchange-traded products (ETPs):
|Portion of Assets in Passive Products||Percentage of Responders*|
* Numbers do not add up to 100 due to rounding
The main reason why about two-thirds of these professionals have a sizable part of their assets in passive instruments is said to be the compliance with fund industry regulations that prohibit trading in individual stocks or bonds. However, investment in actively-managed mutual funds is not prohibited, which is evidenced by one-fifth of professionals having only non-passive products in their private portfolios. It really looks like most fund professionals tout “alpha-generating” products to others by day, but personally shun them by night. How revealing.