Two Images Summarize the Current State of the Investing World

As part of their great future of investing series, the FT published an excellent series of charts summarizing the failures and challenges to investment theory.
Two of the more interesting charts are here (click to enlarge).

The top graph shown here presents the growth in passively managed assets, which has grown from around 8% in 1989 to 18% in 2009. BTW, I would guess the slight dip in passively managed assets between 2007-2009 marks the rush to hedge funds, something that will likely be reversed going forward.

The second graph (click to enlarge) shows the relative growth in market cap for various international asset classes. Emerging was steady at around 5% in both 1989 and 1999 (the first two bars) but by 2009 was around 20%.

Comments

[Donald Ingram]

Good article in FT. Thanks for posting it here. I would add that the main causal factor for the shrinking US share is the parade of investment capital away from anything that is connected to or backed by the USD. Global confidence in the USD is shrinking about as quick as the USD in shrinking in value, as the US government debt forecast going forward is more of the same as last years fiscal total coming in at $1.48 trillion.

2009 Oct 18 12:19 PM