>>> Europe : Brokers Upgrades & Downgrades - 26th of July 2016

>>> Up
*ASSA ABLOY RAISED TO HOLD VS UNDERPERFORM AT JEFFERIES
*FERROVIAL RAISED TO BUY VS NEUTRAL AT UBS
*FLSMIDTH RAISED TO NEUTRAL VS SELL AT GOLDMAN
*GEA RAISED TO BUY VS HOLD AT JEFFERIES
*HAMMERSON RAISED TO HOLD AT JEFFERIES
*INTER PARFUMS RAISED TO BUY AT B. RILEY
*KUKA RAISED TO HOLD VS UNDERPERFORM AT JEFFERIES
*LLOYDS BANKING GROUP RAISED TO HOLD VS SELL AT BERENBERG
*MEAD JOHNSON NUTRITION RAISED TO OVERWEIGHT AT JPMORGAN
*METSO RAISED TO NEUTRAL VS CONVICTION SELL AT GOLDMAN
*SAIPEM RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*SSAB RAISED TO REDUCE VS SELL AT ALPHAVALUE
*TOMTOM RAISED TO BUY VS NEUTRAL AT UBS

>>> Down
*ACTELION CUT TO HOLD AT HSBC
*ARM HOLDINGS CUT TO HOLD VS BUY AT BERENBERG
*BANK ZACHODNI WBK CUT TO SELL VS NEUTRAL AT CITI
*BUCHER INDUSTRIES CUT TO HOLD VS BUY AT BERENBERG
*SFS GROUP CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*ELRINGKLINGER CUT TO HOLD AT HSBC
*FIESTA RESTAURANT GROUP CUT TO HOLD AT JEFFERIES
*KION CUT TO HOLD VS BUY AT JEFFERIES
*LEGRAND CUT TO UNDERPERFORM VS HOLD AT JEFFERIES
*SFS GROUP CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*SKF CUT TO HOLD VS BUY AT JEFFERIES
*STEICO SE CUT TO NEUTRAL VS BUY AT ODDO SEYDLER
*SUBSEA 7 CUT TO UNDERWEIGHT AT JPMORGAN
*VOLVO CUT TO HOLD AT JEFFERIES
*WARTSILA CUT TO HOLD VS BUY AT JEFFERIES

>>> PT Change


>>> Initiation
*MEDIASET RATED NEW NEUTRAL AT MACQUARIE; PT EU3.2
*MEDIASET ESPANA RATED NEW NEUTRAL AT MACQUARIE; PT EU11
*MEREO BIOPHARMA RATED NEW OUTPERFORM AT RBC CAPITAL
*PROSIEBENSAT.1 MEDIA RATED NEW OUTPERFORM AT MACQUARIE; PT EU53

>>> Call

FT :Hinkley Point: what to watch for from EDF

The board of EDF meets in Paris on Thursday morning to discuss its long-planned investment in a new nuclear power station at Hinkley Point in Somerset, southwest England. There is speculation that the meeting will come to a definitive decision after years of delay. If the outcome is to go ahead, the French company has work to do in rebuilding trust. So what should investors and consumers be looking for ?

To begin with, it is important to put aside the fanciful idea that the announcement is simply a matter of French politics. Most of the jobs created by Hinkley will be in the supply chain in France and the argument is that President François Hollande needs to ensure that they are not put at risk before the presidential election next year.

Equally fanciful surely is the idea that the UK government is gritting its teeth and going ahead with a project it no longer believes in because of the need to maintain good relations with France because of the Brexit negotiations and the desire to ensure that the French continue to manage the refugees in the camps outside Calais rather than exporting the problem across the Channel.

Cynical conclusions of this sort will surely be swept aside by the detail of the announcement on Thursday.

Of course, there will still be unanswered questions. Why is the UK government locking consumers into highly expensive power energy supplies, with an index link price for Hinkley fixed and guaranteed for 35 years, despite the fact that the price of every other form of power supply — including solar, wind and gas — is falling?

Why has the government not responded to the report from the National Audit Office which suggests the complex subsidies that give EDF a guaranteed price for the power it produces could impose a cost of up to £30bn on UK consumers because of the weakness of the deal negotiated in 2013 when wholesale electricity prices were higher?

Why has the government refused to countenance borrowing money on its own account to help fund the project — a move that would have cut borrowing costs and reduced the charge to consumers by at least 20 per cent ?

If this is to be a serious commitment by EDF we should at get answers to at least some of the doubts and concerns.

*First, we should expect to see the publication in full of the expert assessments made of the problems that have bedevilled the two EPR reactors under construction at Olkiluoto in Finland and Flamanville in Northern France. Olkiluoto was originally supposed to come on stream in 2009 and, according to the Finns, the costs of the delay now amount to some €2.6bn. Flamanville will be six years late at least and is already €7.3bn over budget. Trust in the technology has to be restored. Publication of the reports on what went wrong in both cases will demonstrate that lessons are being learnt and that EDF has remembered its commitment to transparency.
*Second, we should expect to see the contract for Hinkley published in full. This will be another important step in rebuilding trust. Consumers, French and British taxpayers, the company’s employees and investors — including shareholders in EDF, who have seen the company lose more than 60 per cent of its value over the last two years — need to know in detail who will be carrying the risks associated with the project. If construction is delayed, for instance,who pays any extra cost, and who will compensate consumers for the investment required to find alternative power supplies? The French government as the ultimate owner of EDF has seen these details. So has the Chinese government as a major investor. Consumers and non-government shareholders will be pleased to be brought into the circle of knowledge.
*Third, we should expect to see a detailed explanation of who is funding the construction phase of the project over the next decade. There are numerous estimates of the total cost of the project ranging from £18bn to £37bn but even the lowest figure would make Hinkley the most expensive nuclear station ever built. The sum dwarfs the resources of EDF itself, which has a current market capitalisation of just €21bn Euros. The company’s credit rating has recently been downgraded by Moodys and the outlook remains negative. The risks to the company have already provoked the resignation of the former finance director Thomas Piquemal. Any further French (or UK) government funding would raise more state aid issues in Europe. A proper financing plan is obviously critical to a final investment decision and will help to restore market confidence in the current leadership of EDF.
* Fourth, we should expect to see a clear and absolute commitment to deliver the project by 2025, as repeatedly promised in recent months by EDF’s leadership in the UK. The UK has to plan its energy supplies and the two reactors at Hinkley are due to provide 7 per cent of total requirements. Any further delay would require alternatives to be found, and soon. One hopes Thursday’s announcement will sweep aside all doubts and we will be able to look forward to cooking our Christmas turkeys in 2025 on Hinkley power.
All this, of course, assumes that there really will be a decision on Thursday rather than yet another postponement. The EDF board could decide that there are still too many unresolved problems associated with the EPR and that the risks to the company’s future are too high. As the French proverb has it: Qui mal commence, mal achève.

>>> Asian Update

Asian Mid-session Market Update: Japan stocks, Yen volatile amid more stimulus speculation; BOE's Weale talks down GBP


***Economic Data***
- (NZ) NEW ZEALAND JUNE TRADE BALANCE (NZ$): 127M (6th straight surplus) V 150ME; ANNUALIZED: -3.31B V -3.30BE
- (KR) SOUTH KOREA Q2 PRELIMINARY GDP Q/Q: 0.7% V 0.6%E; Y/Y: 3.2% V 3.0%E
- (JP) JAPAN JUNE PPI SERVICES Y/Y: 0.2% V 0.1% PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 115.5 v 114.9 prior

***Index Snapshot (as of 03:30 GMT)***
- Nikkei225 -1.6%, S&P/ASX -0.2%, Kospi +0.3%, Shanghai Composite +0.5%, Hang Seng +0.9%, Sep S&P500 +0.1% at 2,164

***Commodities/Fixed Income***
- Dec gold -0.4% at $1,323/oz, Sept crude oil +0.3% at $43.24/brl, Sep copper -0.6% at $2.21/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 4.4 tonnes to 958.7 tonnes; 3-week low
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.6778 V 6.6860 PRIOR
- (CN) PBOC to inject CNY130B in 7-day reverse repos
- JGB: (JP) Japan MoF sells ¥399.5B in 0.4% 40-year bonds, bid to cover: 2.89x v 3.07x prior

***Market Focal Points/FX***
- Asian equity markets are mixed despite the more negative sentiment on Wall St in US hours, though volatility is picking up ahead of the Fed and BOJ policy decisions later this week. Japan markets are especially unsettled with more headlines pertaining to the fiscal / monetary stimulus mix, with Nikkei225 falling over 1.5% and USD/JPY plunging some 150pips below 104.40. In other USD majors, NZD/USD was little moved by slightly softer than expected China trade surplus, trading in about a 20pips range around 0.70 handle, while AUD/USD was also in a 20pips range above 0.7460 prior to a late session bounce. S&P emini futures were flat after a 0.2% drop in early electronic trade, and gold remained little changed below 1,330.

- A Nikkei report before market open speculated the govt would double planned "extra spending" for 2016 in stimulus package to ¥6T, and Econ Min Ishihara later remarked it was important to take steps wot proceed with fiscal reform given the current situation. However, Fin Min Aso later said the size of economic stimulus is not yet decided and monetary policy is in BOJ's hands - comments which sent USD/JPY to a 1-week low around 104.30. Separately, PM Abe also maintained that the govt will not reach its nominal GDP target of ¥600T in FY24 if economic growth maintains its current pace.

- With the most recent UK PMI data beginning to showcase the headwinds of Brexit vote on business confidence, BOE's Weale commentary in FT indicated he is dropping his opposition to further monetary stimulus. Weale said the PMIs were very material for next week's decision as he also expressed concern over soft wage growth even before the Brexit referendum. GBP/USD plunged about 60pips on the comments, falling toward $1.3080.

- New Zealand trade data were the centerpiece of another light in economic data session. Terms of trade hit a surplus for the 6th straight month but slightly below expectations. Imports were right in line with consensus, while exports were slightly softer. Shipments to Australia saw the most notable decline of -8.5% y/y, as exports to China rose an impressive 17.9% and to US by 4.7%.

***Equities***
US equities / ADRs:
- TXN: Reports Q2 $0.76 v $0.73e, R$3.27B v $3.20Be; Guides Q3 $0.81-0.91 v $0.81e, R$3.34-3.62B v $3.39Be; +6.2% afterhours
- LVS: Reports Q2 $0.52 v $0.56e, R$2.65B v $2.75Be; +4.5% afterhours
- CNI: Reports Q2 C$1.11 v C$1.11 y/y, Rev C$2.84B v C$3.13B y/y; +0.8% afterhours
- ESRX: Reports Q2 $1.57 (adj) v $1.57e, R$25.2B v $25.5Be; Narrows higher FY16 $6.33-6.43 v $6.35e; +0.5% afterhours
- GILD: Reports Q2 $3.08 v $3.01e, R$7.78B v $7.85Be; Cuts FY16 Product sales R$29.5-30.5B; -3.9% afterhours
- SANM: Reports Q3 $0.63 v $0.63e, R$1.67B v $1.65Be; -9.9% afterhours
- NDLS: Reports prelim Q2 R$121M v $125Me; Chair/CEO steps down for personal reasons, effective immediately; -11.4% afterhours

Notable movers by sector:
- Consumer discretionary: Sands China LTD 1928.HK +7.2% (Q2 result); JSR Corp 4185.JP -7.8% (Q1 result)
- Financials: SmartGroup Corp SIQ.AU +13.7% (placement priced)
- Industrials: Geely Automobile Holdings 175.HK +3.9% (to sell stake in JVs); Hosiden Corp 6804.JP +13.8% (Mitsubishi UFJ Financial Group Raised to Overweight); Mitsui Home Co. 1868.JP -4.4% (delays Q1 result)
- Technology: Hynix Semiconductor 000660.KR -2.6% (Q2 result); Shin-Etsu Polymer Co 7970.JP +4.9% (Q1 result)
- Materials: Northern Star Resources NST.AU -1.1% (FY16 result); Alacer Gold Corp AQG.AU -1.5% (Q2 result); Perseus Mining PRU.AU -1.4% (Q4 result)

>>> US After Hours Summary: CLGX +6%, TXN +6%, CR +5%, LVS +4.4% on e


After Hours Summary: CLGX +6%, TXN +6%, CR +5%, LVS +4.4% on earnings/guidance, semi and casino names higher in sympathy... SANM -10.8%, NDLS -6.9%, GILD -4% on earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CRY +8.2% (ticking higher), CLGX +6.3%, TXN +5.8%, CR +5.3%, LVS +4.4%, CNXC +2.5% (thinly traded, also elects not to pay a distribution to holders of subordinated units for Q2), RE +0.9% (ticking higher), CNI +0.8%

Companies trading higher in after hours in reaction to news: SGY +9.6% (announces estimated production for the quarter ended June 30, 2016 of ~29 MBoe per day, slightly above the upper end of guidance for the quarter), ANCB +6% (Anchor Bancorp engages investment banking firm to assist it in identifying and evaluating various strategic options and operating scenarios), RAVN +4.1% and BEAT +3.8% (to join S&P SmallCap 600), MPEL +2.9%, WYNN +2.2%, MGM +1% (following LVS earnings), MBFI +1.2% (to join S&P MidCap 400), P +1.1% (following late surge higher -- reports that the company hired advisor for strategic options), SWHC +0.7% (Smith & Wesson to acquire Crimson Trace for $95.0 mln, subject to certain adjustments, utilizing cash on hand; expects the acquisition to be accretive to its EPS in fiscal 2017)

Select semi names are trading higher following TXN earnings: MXIM +4.9% , ADI +1.9%, NXPI +1.8%, LLTC +0.7%, MCHP +0.2%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: SANM -10.8%, NDLS -6.9% (announces management and Board changes, sees Q2 revs below consensus), EFII -4.4% (light volume), GILD -4%, MPWR -3.6%, GIG -3.3%, CE -2.9%, CDNS -1.6%, SPN -1.6% (light volume), CMP -1.5%, VNOM -0.5% (thinly traded -  also announces a 7 mln common unit underwritten public offering)

Companies trading lower in after hours in reaction to news: MSTX -21.4% (Mast Therapeutics provides guidance on the anticipated timing for announcement of top-line data from the EPIC study, provided guidance on the anticipated timing for announcement of top-line data from the EPIC study), CRME -18.3% (announces proposed underwritten public offering of common stock), KLDX -5% (to acquire the Hollister mine and the Esmeralda mine and ore milling complex located in Northern Nevada; discloses CAD $100 mln bought deal financing), TCAP -3.8% (commences 6.25 mln common stock offering), PRKR -3.3% (files for ~1.44 mln share common stock offering by selling shareholders), CELG -3% (announces the Lymphoma Academic Research Organisation reported initial data from a phase III REMARC clinical study; REMARC achieved the primary endpoint of a statistically significant improvement inPFS for patients receiving REVLIMID)

>>> US Close Dow -0.42% S&P -0.30% Nasdaq -0.05% Russell -0.25%

Closing Market Summary: Averages Pullback Alongside Oil

The stock market began the week on a lower note, pulling back alongside a sustained downturn in crude oil. Participants maintained a cautious posture ahead of upcoming macroeconomic events and influential earnings reports. Additional focal points impacting today's trade included softening in the dollar and weakness from the heavyweight industrial (-0.6%) sector. The Dow Jones Industrial Average (-0.4%) finished behind the S&P 500 (-0.3%) and the Nasdaq Composite (-0.1%).

U.S. equities began the day on a choppy note, responding to a lack of conviction in European averages. Regional bourses slipped through the session as participants favored a cautious approach ahead of July policy statements from the Federal Reserve and Bank of Japan. The Federal Reserve is set to deliver its latest policy statement on Wednesday while the Bank of Japan is scheduled to conclude its two-day policy meeting on Friday. Additionally, the European Central Bank will release bank stress test results later in the week.

U.S. equities pulled back through the morning as oil extended an early loss. The energy component slipped from the $43.30/bbl price level at the start of the session, eventually carving out a session low ($42.98/bbl) near midday. The S&P 500 (-0.5%) moved lower lockstep with oil, finding support near the 2163/2165 price level. The broader market ticked higher in the final hour as nine sectors trimmed their losses. The commodity-sensitive energy sector (-2.0%) ended at the bottom of the leaderboard, following industrials (-0.6%), and telecom services (-0.4%). 

The Dow Jones Transportation Average (-0.9%) displayed relative weakness as airline names extended their recent rout. The U.S. Global Jets ETF (JETS 22.42, -0.21) declined by 0.9% as JetBlue Airways (JBLU 17.28, -0.30) underperformed ahead of tomorrow morning's earnings release. Separately, Kansas City Southern (KSU 96.41, -1.43) and Canadian Pacific (CP 146.91, -2.25) weighed on the rail sub-group.

In the heavily-weighted industrial sector (-0.6%), diversified machine names underperformed. Roper (ROP 163.33, -9.98) declined by 5.8% after missing estimates and lowering its earnings guidance for the full year. Elsewhere, Dow component General Electric (GE 31.64, -0.42) extended its post-earnings decline to 2.9%.

The countercyclical health care sector (-0.1%)  finished ahead of the benchmark index as the iShares Nasdaq Biotechnology ETF (IBB 282.26, +1.36) extended its monthly gain to 9.7%. Gilead Sciences (GILD 88.55, +2.00) displayed relative strength ahead of this evening's earnings release. Conversely, health care servicers underperformed as Aetna (AET 117.84, -2.62) and Cigna (CI 140.21, -5.79) declined 2.2% and 4.0%, respectively.

In the technology sector (-0.2%), Yahoo! (YHOO 38.32, -1.06) finished lower by 2.7% after agreeing to sell its operating business to Verizon (VZ 55.87, -0.23) for approximately $4.83 billion in cash. Separately, Dow component Apple (AAPL 97.34, -1.32) demonstrated relative weakness after being downgraded to "Sell" from "Hold" at BGC Financial.

The U.S. Dollar Index (97.27, -0.20) ended near its session low as the yen, pound, and euro each gained against the buck. The euro/dollar pair finished higher by 0.1% (1.0991) while the dollar lost 0.3% against the yen (105.79). Separately, sterling gained 0.2% against the dollar (1.3135).

Treasuries finished on a mixed note as the yield on the 10-yr note settled unchanged at 1.57%.

Today's trading volume was below the recent average as fewer than 757 million shares changed hands on the NYSE floor.

There was no economic data of note released today.

Tomorrow's economic data will include the 9:00 ET release of the Case-Shiller 20-city Index for May (consensus 5.4%). Separately, Consumer Confidence for July (consensus 96.0) and New Home Sales for June (consensus 560k) will both cross the wires at 10:00 ET.

>>> SABMiller board to meet to consider ABI offer recommendation after receipt o

SABMiller board to meet to consider ABI offer recommendation after receipt of formal offer - Merger Market
* Increased offer difficult, but not impossible
* Bump in cash offer may void Altria and BevCo irrevocables
* Attention turns to SABMiller investors Altria/BevCo's eligibility to vote

SABMiller’s [LON:SAB] board will meet to discuss its recommendation on AB InBev’s [EBR:ABI] cash bid when it receives a formal offer from ABI once all pre-conditions have been met, it is understood.

A ruling from China’s Ministry of Commerce, the final pre-condition, is expected either this week or next, it was said. The shareholder vote on the deal is said to still be several weeks, and possibly over a month, away.

The SAB board will have to consider its recommendation before the scheme of arrangement document is posted to SAB shareholders. In the deal announcement, the parties said the scheme document will be dispatched “as soon as reasonably practicable” after all the pre-conditions are satisfied or waived.

Announcing the deal in November, SAB’s board said it intends to recommend the GBP 44/share offer. Since then, Chairman Jan du Plessis has said he will listen to investors calling on the board to reconsider after the value of ABI’s partial share-and-cash alternative (PSA) jumped above the cash bid.

Several investors including Elliott, TCI and Sandell have reportedly begun to pressure SAB’s board to renegotiate the cash offer up to remove the discrepancy.

It was stressed that the board meeting after receipt of the formal offer is a normal course of action, and does not necessarily signify that the SAB board will look to pull its preliminary recommendation.

An increase in terms would not be impossible, but would be very difficult because a number of things would need to fall into place, it was said.

Altria, SAB’s largest shareholder, can withdraw its irrevocable undertaking to accept the PSA if the cash offer is increased without its consent, when the cash element of the PSA is not increased by at least an equal amount. The irrevocable from SAB’s second largest shareholder, BevCo can also lapse for a number of reasons, including if Altria’s lapses.

Scheme vote

Meanwhile, there is a growing focus in the legal and arb communities on how voting at the scheme court meeting will play out. The deal requires a majority in number of those present/voting, representing 75% of the value of shares present/voting to approve the deal.

SABMiller may find it tough arguing its two largest investors, with 40.45% between them, are allowed to vote alongside other shareholders at the meeting, three independent lawyers suggested.

In its offer announcement, ABI notes that due to the arrangements with it has with Altria and BevCo, SABMiller will need to determine with the UK court whether the two shareholders should be treated as a separate class or classes from others at the meeting.

If they are treated as different and removed from the vote, this could place additional pressure on SABMiller’s board to seek a price renegotiation, as other investors will have greater relative power at the meeting, the lawyers said.

ABI negotiated the PSA “with and for” Altria and BevCo, CEO Carlos Brito said in October 2015 while courting SABMiller. The alternative includes unlisted shares carrying a five-year lock-up, and a minimal amount of cash. It was designed to be unattractive to all other investors, initially with a lower premium to the cash bid, as reported.

It could be argued that the two large holders are in a different economic position regarding the deal, raising the possibility the court decides they are in a different class of investor, the lawyers said. Altria and BevCo have provided irrevocable undertakings with ABI to vote for the deal if they are allowed at the scheme meeting, and also to accept the PSA.

“I had assumed that they would be treated as a different class, because the PSA was designed for them,” one of the lawyers said. The level of the cash offer could be argued to effectively not matter to the two investors, indicating they have a different economic interest, the second lawyer suggested.

FT : Active fund managers face more pain — Moody’s

Active fund managers face more pain — Moody’s

The investor shift from active asset management to cheaper passive strategies will accelerate in the coming years and weigh on the earnings and credit ratings of investment groups unable to adapt to the new realities of the money management industry, according to Moody’s.
The worsening ability of many fund managers to beat their benchmarks, coupled with their costs, has led to an investor exodus in favour of cheaper investment strategies such as exchange-traded funds, that seek to merely mimic the performance of a market at the cheapest possible cost.

Ongoing for over a decade, the trend has accelerated and broadened recently, and badly rattled the traditional asset management industry that controls trillions of dollars worth of savings globally. As a result many have sought to build or buy their own passive investment operations, but those that fail to adjust will increasingly struggle, Moody’s warned in a report published on Monday.
“Large traditional asset managers that lack a core competency in passive investing, or that are unable to deliver outperformance to justify their fees, are at risk of seeing their business profiles weaken further, increasing the likelihood of ratings deterioration,” the rating agency’s report said.
Academics have long shown that the average fund manager will only perform as well as the market, and underperform it after fees, but the ability to even get close to benchmarks appears to have atrophied further in recent years.
Only 18 per cent of “large cap” US fund managers – which invest in the biggest American companies – managed to beat the Russel 1000 index in the first half of 2016, according to Bank of America Merrill Lynch, the worst performance of active funds since at least 2003.
Moody’s argued that the fundamental driver of the poor performance of active asset managers is the sheer size of the industry, with over 9,000 mutual funds and 10,000 hedge funds in the US, according to the rating agency.
“Overcapacity leads to investment mediocrity, since true talent is limited and size works against the investor in the form of increased transaction costs and difficulty in identifying scalable investment opportunities,” the report said. The active asset management industry will therefore have to “shrink substantially” in the coming years to improve performance, it added.
Some big asset managers agree, and have moved to constrain fund sizes and focus more on returns. “There is a scale problem in the industry,” Peter Kraus, the chief executive of AllianceBernstein, told the FT earlier this year. “Our advice to the industry is to constrain ourselves. We are hurting ourselves by growing too big.”
Others have predicted that a wave of consolidation will sweep over the industry as a result of the current challenges, but Moody’s was more circumspect, doubting that this would be a “panacea”.
“Acquisitions do not address the root cause of active underperformance, since they do not reduce the amount of capital managed by active managers or improve the aggregate performance of the industry,” the report argued. “Instead, a fundamental rethinking of the traditional active mutual fund industry as a whole is required.”
The trend towards passive investing is particularly powerful in the US.While $21.7bn gushed out of actively managed US equity funds last month - the worst monthly figure since the depths of the financial crisis - passive funds absorbed $8.7bn.
A new rule on the fiduciary duties of investment advisors introduced by the Department of Labor this year is expected to speed up the investor shift from active to passive investment vehicles.