The passive opportunity
Oct 18, 2024
Over the past three years, investor behaviour in Europe has undergone a marked shift, with a growing preference for ETFs over actively managed funds. Data from Lipper reveals nearly €500 billion in outflows from actively managed strategies, primarily from equity funds, during this period. At ECP, we see this as a compelling opportunity for stock pickers like ourselves. Unlike passive strategies, which are inherently detached from the underlying fundamentals of the businesses they invest in, active management allows us to capitalize on price distortions in equity markets. This disruption in price discovery creates significant opportunities for the few truly active investors to invest in high-quality companies trading at substantial discounts to their intrinsic value.