The Boston Fed Enters the Active vs. Passive Debate

The video discusses the shift from active to passive investing, highlighting its effects on liquidity, redemption risks, and market volatility. It examines how passive investing reduces certain risks but may increase others, such as market volatility due to leveraged ETFs. The concentration of assets in large firms like Vanguard and BlackRock is also addressed, noting potential systemic risks.

How do leveraged and inverse ETFs contribute to market volatility?

What evidence is there to suggest that passive investing could lead to increased market volatility?

What potential risks are associated with the concentration of assets in large passive investment firms like Vanguard and BlackRock?