
Half of US stock fund assets are now invested in index funds - paulpauper
https://qz.com/1623418/index-funds-now-account-for-half-the-us-stock-market/
======
siliconc0w
It'd be nice if it were easy to buy a Vanguard ETF but modified to either
avoid specific companies or set to create incentives for certain types of
companies. Like a company could get an outsized weight if it has a more
diverse executive team or compensated them less than %N00 of the average
worker. Just to give passive investors some sort of tool to nudge companies
into better behavior (as defined by their aggregate preferences).

~~~
twblalock
There are some ETFs that focus on "ethical" and "socially responsible"
companies. I don't think Vanguard has any. DSI seems to be the biggest one.

~~~
awithrow
Vanguard just launched VEIGX [https://investor.vanguard.com/mutual-
funds/profile/overview/...](https://investor.vanguard.com/mutual-
funds/profile/overview/veigx) as their environmental, social, and governance
index fund.

~~~
twblalock
Thanks, I didn't know that.

It's interesting that this is an actively managed fund. There are actually a
few indices for this kind of thing but apparently Vanguard is not using them:
[https://www.msci.com/esg-indexes](https://www.msci.com/esg-indexes)

------
jpalomaki
Atlantic article from 2017 [1] mentioned that every company having the same
set of investors might reduce competition on the market:

"Julio Rotemberg, then a newly minted economist from Princeton, posited that
“firms, acting in the interest of their shareholders,” might “tend to act
collusively when their shareholders have diversified portfolios.” The idea,
which Rotemberg explored in a working paper, was that if investors own a slice
of every firm, they will make more money if firms compete less and
collectively raise prices, at the expense of consumers"

The article does point out that there are also other opinions on the subject.

[1] [https://www.theatlantic.com/magazine/archive/2017/09/are-
ind...](https://www.theatlantic.com/magazine/archive/2017/09/are-index-funds-
evil/534183/)

~~~
paulpauper
doesn't that already happen? It seems like many firms converge on a single
price for a service or product, such has domain names, soda, candy, or web
hosting or credit card fees, give or take 10 percent or so.

~~~
cuchoi
The problem is that theoretically that could both indicate collusion or market
efficiency.

~~~
p1necone
Can we tell the difference just by estimating production costs? (at least in
the case of soda, candy etc). Or is it more complicated than that?

~~~
cuchoi
In theory, yes. If you had a good estimate of __marginal __economic costs then
it would be easier to conclude if there is collusion. In practice, it is very
difficult to estimate economic costs. This, for example, would include
estimating the opportunity cost of each company 's investment.

------
bognition
This is an extremely interesting turn of events that leads to a few questions.

Do the index funds participate in all of the elections for all of the
companies they hold?

If yes how do the funds vote? For the interests of the individuals companies
or do they push cross company agendas?

If no then does this mean that index funds are concentrating voting power in
the hands of non fund holders?

~~~
evgen
Yes, index funds vote. They tend to push for shareholder-friendly issues
(independence of corp board, blocking poison pills, etc) and less on
'political' issues. Some research
[[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2475150](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2475150)]
has shown that you can see a significant difference between companies in the
index and not in the index on these issues.

Most index funds are not as active as other investors, but they tend to
maintain voting shares rather than get discounted non-voting shares because
the latter always end up getting screwed by the voting shares...

~~~
Scoundreller
> Most index funds are not as active as other investors, but they tend to
> maintain voting shares rather than get discounted non-voting shares because
> the latter always end up getting screwed by the voting shares...

How? In my (Canadian) experience with dual-class shares, they’re usually the
same slices of the pie and the same dividend payouts.

The usual problem is when the voting shares are impossible to actually buy, so
you’re at the whims of the founding family’s ego. But then you don’t even have
the choice of buying the voting. And sometimes when you could, the founders
own 51%+ anyway, so you’re just buying a vote you can’t use and paying that
premium to the founding family again.

~~~
evgen
Voting shares can vote on whether or not the company issues more shares, pays
out accumulated profit as dividend, takes on a debt load that may look good in
the short-term but will have a crippling impact on the long-term, etc. An
index fund cannot just decide to dump a company's shares because management
has decided to drive the company off a cliff for the sake of a quick payoff,
so paying a bit extra for voting rights tends to be in their interest.

------
thtthings
All this does is make all stocks move up or down regardless of their
individual performance to some extent.

If there is a big swing in either direction. Some stocks will get way
overvalued or undervalued compared to their intrinsic value. Maybe this is
beneficial to a value investor that picks stocks instead of investing in
ETF's? I wonder if ETFS will make the market drop a lot in the next crash and
will the etf's even track their underlying accurately? Lot's of arbitrage
opportunities.

~~~
jayalpha
"Lot's of arbitrage opportunities. "

Probably with put options.

[https://www.zerohedge.com/news/2017-04-09/horseman-global-
un...](https://www.zerohedge.com/news/2017-04-09/horseman-global-unveils-new-
shorting-philosophy-using-etf-flows-catalyst)

ETFs were an outstanding idea but never meant to be used on such an excessive
scale. If once stock falls and many of the ETFs have to re-balance their index
to reflect this, this creates a feed back effect. And if Index ETFs and HFT
are the last ones trading this stock, good luck with this.

Everything works until it doesn't.

~~~
asdfasgasdgasdg
Cap-weighted index funds do not have to rebalance when a stock falls (this is
the most common type as I understand it). Consider a cap-weighted index where
there are only two stocks, A and B. At time 0 the have an equal market cap of
$1B each. The underlying mutual fund has $20M of AUM, so they hold $10M of A
and $10M of B.

    
    
        State of the world
        ------------------
    
        Market caps   A=$1B B=$1B
        Fund holdings A=$10M B=$10M
    

Now at time 1 some bad news about B is made public. B's price falls by 50%.

    
    
        Market caps   A=$1B B=$0.5B
        Fund holdings A=$10M B=$5M
    

As you can see, the market cap weighted target for B dropped from 50% to 33%.
But the fund's holdings of B also dropped from 50% to 33%. No rebalancing is
required because the asset price changed at the same time as the market cap
weighted fraction changed.

The only time a fund needs to rebalance is when a security is removed from or
added to the underlying index. I don't know how that is handled, but I suspect
it is predictable and priced in.

~~~
thtthings
What happens when the ETF value goes down not because the value of the
underlying stock goes down but because people are selling the ETF?

Won't they need to rebalance then? The way it will happen is they will have to
sell all the stocks in the ETF according to their percent allocation

~~~
asdfasgasdgasdg
Authorized participants [1] will buy the undervalued shares and redeem them
for shares in the underlying fund for a profit. FWIW, there is no such thing
as "rebalancing" an ETF. The underlying fund can rebalance, but the ETF is an
exchange-traded representation of the underlying fund. There's nothing in it
to rebalance.

[1]: [https://www.etf.com/etf-education-center/7540-what-is-the-
et...](https://www.etf.com/etf-education-center/7540-what-is-the-etf-
creationredemption-mechanism.html?nopaging=1)

------
lordnacho
A relevant perspective for the tech community is this:

\- Index funds will buy whatever there is that passes a filter (eg market cap)

\- Private companies like Uber now rival the size of large cap firms

\- So if you can pull it off, you can find a buyer for your VC backed firm who
doesn't think.

~~~
Scoundreller
Depends on the inclusion criteria and process are. I don’t think index funds
buy at IPO.

Presumably they would start to buy after 90 days and a small chunk each
trading day, determined by average daily volume and other factors.

By that point, the active buyers/shorters should do their usual bit of
fighting each other until the price is « correct ».

Doing massive buy and sell orders based on known criteria would be
problematic.

~~~
lordnacho
> By that point, the active buyers/shorters should do their usual bit of
> fighting each other until the price is « correct ».

Their assessment will include the fact that large buy orders are coming.

> Doing massive buy and sell orders based on known criteria would be
> problematic.

There's a number of firms that run quant strategies based on index
add/removes.

~~~
Scoundreller
In theory. But it’s possible for there to not be enough depth of market on the
date/time of a massive buy/sell order from a big ETF.

I’m sure they have the data and know which method works out best in practice.

------
otalp
Wondering if this could lead to an "index fund bubble". If everyone invested
using index funds, markets exhibit increasingly erratic behaviour
[https://www.forbes.com/sites/greatspeculations/2018/09/19/ar...](https://www.forbes.com/sites/greatspeculations/2018/09/19/are-
we-headed-for-a-passive-index-meltdown/#7c7ba185413e)

~~~
Scoundreller
There’s no difference, in aggregate, between retail investors investing in an
index fund vs a million investors throwing a million darts at a million
newspaper stock pages.

(Ignoring weighting/market cap, but the point is that a lot of investing was
passive anyway)

One experiences a lot less variability, bookkeeping and trading fees though.

~~~
RhysU
There is a difference. The S&P500, e. g., is not constructed by throwing
darts.

~~~
Scoundreller
Which could be considered « active » since they have to look at the top 500,
and add/remove as required in a manner that won’t cause a company dropping
from 500 to 501 from becoming 600 because of a sell off.

But that just goes to the point I’m making: there are varying degrees of
active and passive funds. The rise of passive index funds won’t distort much
of anything when funds were coming from a passive fund that tried to sell
itself (and charge) as active.

------
baby
I'm a noob in investing so I have a few questions:

* Is this a bad news?

* Are there index funds that blindly follow the top 500 but actively remove dumb stocks?

* Should I avoid American-only index fund? Looks like the Chinese market is becoming pretty strong and there doesn't seem to be any insurance that the American market will stay as strong in the next 20+ years. I would comfortable betting on the world market, but not really on one country's market.

* I have some money saved up that I don't know what to do with. I'll probably look into investing for an apartment in the next 2-5 years. Should I let it sit in my bank account or should I put everything in an index fund?

~~~
sytelus
I'm surprised lot of people here think this is not bad news. It most certainly
is. Think about it: Index funds don't make any moves by themselves, they
simply follow the aggregate decision of active investors that are still in
market. This is all good when they have < 50% share but above that now there
is more asset that _follows_ smaller assets.

Consider the extreme example: Let's say 99.999999% of assets are in index
funds and now there are basically only 10 people left in market who are doing
active investing. So when these 10 people decides to sell stock of some
company, that stock will fall by some minor amount but immediately all index
funds would need to react to this minor drop and sell _their_ holdings. But
that would cause more market drop and price would take a death spiral route.
This basically means that those 10 people now left to do active investment can
now control the market. Any of their small movements gets amplified by large
gorillas of index funds.

Above is just tip of the iceburg. The secret of the success of index funds has
been very simple: They aggregate all the active investors and these average
turns out to be better than individual. However when number of active
investors reduces, the variance would increase and this means index funds
would become less and less optimal over time.

~~~
OscarCunningham
> So when these 10 people decides to sell stock of some company, that stock
> will fall by some minor amount but immediately all index funds would need to
> react to this minor drop and sell their holdings.

That's not how it would work.

1) When one of the 10 sells they must be selling to another of the 10 who is
buying. There's no such thing as just selling. Instead the way that the price
would drop would be that the 10 start trading that stock between themselves at
a lower price than it had been before.

2) If the price dropped then that wouldn't mean that the index fund had to
sell. The index fund aims to own a fixed proportion of each company. If they
own $98 million of a $100 million company and then the share price drops in
half then they now own $49 million of a $50 million company. There's no need
for them to do anything.

~~~
sytelus
1) few parties can collude to sell or buy at the price they desire.

2) Index fund must balance their portfolio. If stock A goes down and B goes up
then they must sell off A and buy more of B to re-balance. At least that has
been my understanding.

Above two in combination means that you can cause chain reaction which is to
be expected because much larger dollars is simply trying to imitate much
smaller dollars. So later gets to control the former.

~~~
dagw
_Index fund must balance their portfolio._

They must balance to the underlying index, not so that they hold the same
value of each stock. If A goes down and B goes up they don't have to do
anything unless the change is so dramatic that it causes the people who
compile the index to update which stocks are in the index.

What can happen is that a stock being added/removed from a major index can
cause a large amount of buying/selling by index funds as they are 'forced' to
add or remove that stock in their portfolio. However that is a fairly rare
occurrence.

------
RickJWagner
I learned this lesson, but I wish I had learned it sooner.

A few decades ago I started dollar-cost averaging into a hot-rod actively
managed fund. As always seems to happen, the fund cooled down and I was late
to catch on. My money was not effectively put to use.

Then I started reading (and YouTube watching) people like Malkiel, Buffet,
Bogle, Dalio, etc. They all clearly explain the benefits of index funds for
the vast majority of people. I believe them.

Indexing is the way to go. Read Bogleheads.org for great advice on this and
other topics.

------
AznHisoka
If the allocation of assets to index funds approach 100%, wouldnt that distort
the prices of stocks? Instead of the price reflecting the fundamentals of the
business and earnings, it would simply reflect how the index is moving. A bad
company with a dying business would not decline in price because money was
flowing in its index.

And active managers would not short dying businesses if they realize _everyone
else_ was blindly plowing money to it because it belonged to an index. Thus
worsening the situation. The price of a stock is no longer “efficient” and not
a reflection of the information available to the entire market.

Personally I wish index funds were abolished, forcing everyone to pick and
choose the companies they think will flourish or fail.

~~~
throw0101a
> _Personally I wish index funds were abolished, forcing everyone to pick and
> choose the companies they think will flourish or fail._

Given that even the so-called professionals that manage active funds can't
consistently beat the index, J. Random Schmoe has no chance:

* [https://www.aaii.com/journal/article/most-mutual-funds-do-no...](https://www.aaii.com/journal/article/most-mutual-funds-do-not-outperform) * [https://www.ifa.com/articles/despite_brief_reprieve_2018_spi...](https://www.ifa.com/articles/despite_brief_reprieve_2018_spiva_report_reveals_active_funds_fail_dent_indexing_lead_-_works/)

PDFs:

* [https://us.spindices.com/documents/spiva/spiva-us-year-end-2...](https://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdf) * [https://us.spindices.com/documents/research/research-fleetin...](https://us.spindices.com/documents/research/research-fleeting-alpha-evidence-from-the-spiva-and-persistence-scorecards.pdf)

~~~
Scoundreller
Maybe. J Random Schmoe may do better because they’re investing their own
money. The money manager managing JRS’ money on their behalf may make choices
that help our MMM’s best friend more than anything else. Great for MM, but
terrible for JRS.

~~~
throw0101a
Back in the day I invested some money when AAPL was at $100 and when RIMM was
at $100. I was only half-right in my assessments.

Given that last time I did an IQ test I was on the right-hand side of the
proverbial Bell curve, I'm not sure how well anyone that is below average (IQ
100) would fair.

I've since learned my lesson and stuck with index funds (dividends being re-
invested), and gotten market returns that have been quite nice. At some point
markets will tank, and I will rebalance by liquidating some bonds and picking
up some more equities (selling high, buying low).

And yet @AznHisoka thinks I should not be allowed to easily get market returns
by investing in index funds. (Which the Oracle of Omaha himself, Warren
Buffet, suggests that most people do.)

~~~
AznHisoka
Index funds are great for individuals. And I recommend most people stick with
them.

But if the purpose of the stock market is to allocate the right amount of
capital to companies based on their fundamentals and earnings, index funds
don’t help.

------
around_here
I love the assertion that a stock reflects some sort of real value. They
don’t, the market is an irrational pile of crap, and that’s why index funds
are the best. They take the cream of the crap.

~~~
Scoundreller
I like to think they get all the value of active investing without having to
pay for it.

Kinda like if I beat the price of your life insurance policy by 1 cent. I’ve
effectively externalise the actuarial and marketing costs to somebody else.

------
sparkling
One must also consider that people are using passive index funds as a tool to
make active bets.

E.g. if you are buying some US pharmaceutical index fund you are buying a
passive product _but_ are actually making two very active bets: you asume that
pharmaceutical industry will outperform other sectors and that US
pharmaceutical firms will do better than the rest of the world.

~~~
maratd
What bet am I making when I buy an entire stock market index fund?

~~~
sparkling
You are still making a number of small bets unknowingly.

A "entire stock market index fund" (which one?) has a methodology for
weighting the funds and the markets it invests in. Most funds today weigh
their selection by market capitalization. A other weigthing method, such as
considering country GDP, might deliver superior results.

Also such "entire stock market index funds" usually only include large cap
stocks -- small or micro cap stocks may or may not deliver better results.

Also such "entire stock market index funds" often will exclude entire
countries. E.g. the very popular MSCI World and MSCI Emerging Markets funds
contain 0 stocks from Ukraine but last year Ukraine had the best performing
stock market worldwide.

~~~
Scoundreller
I’ve made the decision to not bother with international diversification beyond
US and local (Canadian) indicies.

Why?

Non-US countries usually don’t have diverse stock indexes. You’ll have their
big telecoms, their big banks and a few other industries. A lot of their big
industries will be owned by multinationals anyway, and the smaller ones are
private.

The US large caps provide tons of international diversification, with a lot
less paperwork and withholding taxes.

Google, Apple, Facebook, McDo’s, any oil company, etc. have large amounts of
foreign revenue/branches, even in countries without a stock market that you
could buy on.

If anything, US investors have too much international diversification when
they buy US large cap indicies.

If the US economy does well but the rest doesn’t, US stock market returns will
be poor.

------
cs702
Does the stock market perform its socially beneficial function if a majority
of capital is passively indexed?

Could passive index funds, which seek to mimic the stock market, actually be
in control of the stock market? Are they mimicking themselves?

Should we be concerned that most passive capital is invested in the same
companies, in the same proportion, weighted mainly by market cap?

Can passive index fund trading move the stock market?

If there is an economic downturn, how would a wave of cash withdrawals from
passive index funds affect stock prices?

Have active managers changed their behavior in response to the rising
dominance of passive index funds?

NO ONE knows the answers to these questions, at least not with certainty,
because we're in _uncharted territory_.

This is the first time in history that a stock market has been dominated by
passive index funds.

~~~
ajross
> NO ONE knows the answers to these questions,

NO ONE knew the answers to those same questions about active investment
either, though. Markets are markets, and behave in crazy unstable pro-cyclic
ways because of psychology, not abstract theory.

Here's an obvious hypothesis: Nothing's going to change at all. The fraction
of holdings in these index funds is high, but matches the fraction that was
always just thrown into the "balanced random junk" segments of portfolios.
Players who want to make focused bets on particular securities or industries
will continue to do so, in exactly the same proportion they did before.

I mean, NO ONE knows if that is true or not, but I'd put money down on it.

~~~
cs702
It's possible. I did not make any claims to the contrary.

That said, in the event of market stress, it seems that more _individual_
portfolios will be more highly correlated _with each other_ than in the past.

Isn't that a significant change? In light of it, are you willing to bet that
aggregate investor behavior in a future period of stress will be similar to
what we have seen in the past?

~~~
aaronblohowiak
Maybe it will contribute to the increased correlation between stocks and other
investments

------
intopieces
It's difficult to evaluate whether this is good or bad since we can't rewind
and see what would have happened if we didn't go this route.

I can only rely on two things:

(1) This option is cheap in terms of fewer fees, and easier in that I don't
have to agonize over picking obscure stocks.

(2) If I get fucked, everyone is fucked, so I'm sure we'll figure something
out or just be on our merry way to hell together.

A little shrewd and fatalistic I guess.

------
lowdose
I wonder if there is a link between the amount of github commits and stock
return.

~~~
escapecharacter
What’s the market cap per line of code?

------
human20190310
The reason that index funds are so popular is because actively managed ones
are so bad. Why pay a manager to do worse than the index?

------
sytelus
I think this is point of infliction. I highly suspect that there is probably a
mathamatical theorem here which might state that index funds are efficient
only when they occupy less than 50% of the asset share. One of the byproduct
of this distribution is that many bad companies which wants to do IPO and they
will get auto-funded by small-cap, mid-cap index funds. Also, now there are
smaller number of players who are moving knobs and index funds are simply the
followers to these small players. In 10 years the effects of this would become
quite apparent. If Buffet was going to bet on index funds for next 10 years,
he would most likely lose.

------
Scoundreller
I want to know how « active » the actively managed funds are.

If the fund is actively looking for deep value bets and trying to drum up
increased value for stockholders, then it’s truly active.

But if they’re just creating a « high-income fund » and just throwing together
a basket of high dividend stocks, or a real estate fund and putting together a
basket of REITs, they’re effectively passive funds and have little impact on
the market vs. true index funds. On average, switching between these doesn’t
distort the market.

~~~
yhoiseth
The Norwegian Consumer Council just won a lawsuit against the country's
largest bank, DNB, for claiming just that:
[https://www.reuters.com/article/norway-dnb-
lawsuit/update-1-...](https://www.reuters.com/article/norway-dnb-
lawsuit/update-1-norways-dnb-faces-compensation-bill-for-overcharging-fund-
investors-idUSL5N22L3C5)

------
thtthings
This also means one more thing: Institutional investors and smart money is
selling into this rising market. Retail investors are going to be left holding
the bag.

The headline should be: Institutional and professional investors are going
into cash resulting in individual investors that buy ETF's share to go up to
50 percent.

When professional will start shorting and going the other direction. Headline
will be: 80 percent of falling US assets are now invested in index funds.

~~~
throw0101a
Storytime:

> _Meet Bob._

> _Bob is the world’s worst market timer._

> _What follows is Bob’s tale of terrible timing of his stock purchases._

* [https://awealthofcommonsense.com/2014/02/worlds-worst-market...](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)

~~~
thtthings
If you are never going to sell your ETF/stocks then yeah it doesn't matter. I
read online once that a mutual fund tried to see which of there customers made
the most money. The customers that made the most were the ones who had
forgotten they made that investment and the others who were dead.

~~~
throw0101a
> If you are never going to sell your ETF/stocks then yeah it doesn't matter.

Most people are not investing for 'fun', but rather for retirement. So "never"
selling, or at least not-selling for several decades, is actually a reasonable
assumption.

The main problem is that the general public read headlines and see " _Markets
Are Crashing!!1!_ " and pull out. Whereas if they could keep their cool a bit,
and stay invested (and ideally keeping investing (monthly?) on the way down),
they'll generally end up okay when they approach retirement.

------
beezle
Nobody really was/is freaking out over broad equity active mutual funds that
hold assets with a very high correlation to the index. ETFs offer intraday
arbitrage opportunities during market panics (up or down), unlike mutual
funds.

------
chiph
I'm a fan of index funds but part of me can't help but wonder if this
development will result in actively-managed funds and wealthy individual
investors having outsized influence on market direction?

~~~
RickJWagner
Why would that be? The actively-managed funds will be less relevant, holding
fewer dollars and fewer shares purchased.

~~~
johntb86
Changes in stock price are measured by the prices that trades happen at, and
passively managed funds are much less likely to do trades (Per dollar
invested).

------
jammygit
Is it possible for too much money to be in funds that automatically allocate
based on company value? Imagine if 90% was in index funds like the S&P - would
that distort the accuracy of the market?

~~~
kiran-rao
The limiting factor is leverage. If a hedge fund (or equivalent) had enough
data and confidence in a company, they would borrow money to increase their
position size. This would make it possibly to affect price for non passive
investors.

------
ToFab123
Is the a complete list of the index funds somewhere?

~~~
ivanche
Maybe [https://www.justetf.com/en/find-
etf.html](https://www.justetf.com/en/find-etf.html) will help you?

------
ohiovr
If everyone piles into the same asset, wouldn't that asset be overbought?

------
reasonablemann
The reason this is not a problem is that stocks which are undervalued
intrinsically will be purchased by larger companies that see the value.

Of all the important economic issues of our time, this is not one of them.

------
naveen99
anyone buy repeating insurance (put options) along with index funds / futures
?

~~~
whitepoplar
Tail hedging seems great in theory and I know that several professional
investors do it (Universa, Nassim Taleb, etc), but I'm not sure how they make
it work. S&P500 out-of-money puts are expensive and it just seems that years
or decades of put losses leading up to the "big event" could run you dry.

~~~
naveen99
sell at the money monthly straddles to finance the otm puts ?

~~~
mrigor
selling insurance to buy insurance defeats the point, ATM options only pay for
expected moves so you have no protection gain with your strategy

~~~
naveen99
The point is giving up some upside gain for downside protection. You are net
selling insurance, with a slight bullish bias.

------
christi_meyer
Fidelity, the largest fund manager with $6T AUM, is taking a different
direction. HN won't want to hear this but here it goes: (get your pitchforks
ready)

"Fidelity Investments’ new cryptocurrency company will offer trading for
institutional customers in a few weeks, Bloomberg reported Monday.

Betting that the cryptocurrency bear market will turn around, Fidelity created
its cryptocurrency platform Fidelity Digital Assets in October. The new
company began a custody service to securely store bitcoin for its customers in
March, CNBC reported. Now, it will be letting customers buy and sell the
cryptocurrency in the upcoming weeks, according to people familiar with the
matter.

Fidelity, a roughly 72-year-old family controlled firm, is primarily known for
managing retirement plans and mutual funds. But it also spends $2.5 billion
per year on technologies like artificial intelligence and blockchain.

Forty-seven percent of institutional investors think digital assets are worth
investing in, according to a survey released by Fidelity on May 2.

Further, of the 450 institutions interviewed by Fidelity for research for its
new company, everyone from wealthy families to hedge funds to pensions, 22% of
respondents already owned a cryptocurrency.

Since the bitcoin boom in 2017, the world’s largest cryptocurrency has dropped
more than 60% since its high of almost $20,000 at the end of 2017 and was
trading near $5,703 on Monday.

Fidelity is only offering the crypto trade to institutional customers. Rivals
like Robinhood and E-Trade Financial are taking on retail investors."

[https://www.cnbc.com/2019/05/06/fidelity-is-reportedly-
about...](https://www.cnbc.com/2019/05/06/fidelity-is-reportedly-about-to-
offer-cryptocurrency-trading-for-pros-within-a-few-weeks.html)

~~~
benj111
Which bit will we not like?

JP Morgan are launching a crypto currency also btw.

[https://www.theblockcrypto.com/2019/02/14/jp-morgan-
launches...](https://www.theblockcrypto.com/2019/02/14/jp-morgan-launches-its-
own-cryptocurrency-the-first-for-a-major-us-bank/)

~~~
christi_meyer
The bit about cryptocurrency. Many in the HN community are anti-crypto and
with just about as much emotional enthusiasm as an anti-vaxxer. I'm a long
time member of HN, before crypto became popular. I've seen the continual rise
in negative sentiment. As a veteran software engineer (cutting code since I
was a kid in the 80's), there's always been a purist camp that can't quite
wrap their head around the financial markets. Dotcommy crypto scams aside,
some equate the financial markets with 'badness' or the dark side (wallst =
bad). The adoption of crypto is inevitable and unstoppable. I spend my time
developing algorithms for financial markets in C, C++ and Python and have yet
to see any software engineers in this camp reject crypto. I encourage all to
not to throw the baby out with the bath water. Crypto is a great trading
vehicle and a great way for a new breed of company to raise capital from a new
and truly global capital market.

I'd encourage those that are anit-crypto in the community to adapt. I never
wanted to move from real BBSs to Compuserve, but I had to. Never moved to AOL
just went straight to geocities which was a mistake but here we are.

~~~
benj111
I haven't really detected _anti_ crypto, sentiment. Theres many (most?) people
who are bearish on crypto, and I would count myself in that number. And when I
say bearish I mean Bitcoin won't be worth $Xmillion and be used for some
meaningful portion of trade anytime soon.

Actually, I think banks launching their own crypto currencies could be the one
of the best chances they've got. I assume the banks have identified valid use
cases for them. The ironic thing is they sacrifice the supposed advantage of
crypto currencies, which is their decentralisation.

------
return1
Maybe index funds should not be allowed in the first place? It's extreme
navel-gazing at best. Does that have anything to do with the purpose of public
markets (to fund the economy)?

~~~
yoz-y
As opposed to putting your money into some gambler's hands or trying to get
lucky yourself?

~~~
return1
it is not supposed to be gambling

