While passive investing isn’t a bad way to make money, this method definitely has its naysayers. Some of its critics aren’t a fan of passive investing’s contributing to price inflation in big stocks like Amazon, for example. According to CNBC, this inflation causes a bit of a bubble that’s getting ready to pop. However, while many believe the bubble is in big tech, one company, Ned Davis Research, believes otherwise.
Passive Investments Are The New Future
When it comes to passive investments, real estate and utilities are benefitting much more than it may seem. In fact, the research space found that passive investing like exchange-traded funds, otherwise known as ETFs, are the biggest contributor. More specifically, these funds have control of 11% of the real estate industry and 9.8% of the utilities one.
Tanger Factory Outlet Centers is one example. This real estate stock puts money into shopping centers whenever it can. That, and around 32% of its stock has been overtaken by ETFs, which is quite surprising.
From here, other companies like American States Water and the California Water Service Group saw around 23% of the same thing happen. Washington Real Estate Investment is another group. It’s interesting, considering that one would think big tech is being taken over more than any other company. Instead, it’s the aforementioned spaces.
So, when it comes to investing passively, consumers should watch Tanger or other, smaller spaces than they do big tech like Google or Facebook. That way, they can catch a bubble before it pops. Will Geisdort, the ETF strategist over at Ned Davis Research, shared a note about the situation:
“Tanger Factory Outlets is the real crowded theater, where investors might get trampled rushing for the exit. Tanger Factory Outlet Centers (SKT) is the poster child for the passive bubble.”
Of course, more important is to pay attention to whatever industry is benefitting most from passive investing.