Index firm Solactive writes:
September 2019 marked a major milestone in US financial history as the assets managed under passive strategies (the selection of stocks based on a mechanical, rules-based approach) surpassed those under active strategies. The rise of ESG and its latest evolution, active ownership, is another megatrend within the investment world.
Are these two trends contradictory? Is passive investing incompatible with active ownership – one of the six tenets of PRI’s principles of responsible investment? In this blogpost, we argue that it is not, and that clients and other stakeholders increasingly demand it from passive managers….The next frontier is for investors to incorporate share voting and corporate engagement into their core processes. Besides demand from ultimate beneficiaries (retail investors or institutional asset owners), there is a clear regulatory underpinning to that evolution. [footnotes omitted]