Watch Real Estate for First Signs That Passive Investing Has Grown Too Big
- Index funds own increasingly large portions of some companies
- Eight of 10 stocks most popular with indexes focus on property
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The future of passive investing is facing one of its biggest tests yet. And surprisingly the challenge is coming from a handful of relatively obscure real-estate companies.
Funds that track indexes are coming increasingly close to owning a majority of shares in eight property owners and managers, according to a report from Bloomberg Intelligence. Real estate stands out in a wider market where just 16 percent of stocks are held by passive investors. That makes these companies potential bellwethers for the impact of benchmark tracking as the funds grow.