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Nir Kaissar

Rise of Indexes Threatens to Eclipse Their Creators

Funds are deciding they don't need third-party providers or their fees.
Photographer: Tim Boyle/Bloomberg

Index providers have won big in the great migration from high-priced active management to low-cost index funds. But their fortunes are set to turn.

The same trend that brought index providers to prominence is now coming for their profits: Investors are in no mood to pay fees. Investors plowed a net $2.5 trillion into mutual funds and ETFs that charge 0.2 percent a year or less from 2007 to 2016, according to Broadridge, which tracks data from 80,000 funds globally. That’s more than twice what they invested in all other funds combined.