The boom in passive investing won’t cause the next crash

Markets in Europe hit an intriguing milestone last year.

Exchange-traded funds (ETFs) in Europe now hold more than $1trn worth of assets under management, according to figures from consultancy ETFGI (as reported by the FT).

That represents a doubling in size over the last four years.

A lot of people worry that this is some sort of bubble. Or that it’s bad for capital allocation.

Let’s have a little think about that this morning, shall we?