Date of Completion

Spring 4-28-2021

Thesis Advisor(s)

Liping Qiu; Alexander Amati

Honors Major

Finance

Disciplines

Finance and Financial Management

Abstract

The study investigates the plausibility of an active to passive transition, the impact of crises on the potential transition, and the performance-flow relationship of both active and passive investment products, which includes US equity, open-end and ETF, funds. The analysis compares active and passive funds through the lens of fund flows, absolute returns, and risk-adjusted returns. The study shows that there seemed to be an active to passive transition from 2007 – 2019 and that 2020 – 2021 exhibits measures that could describe changes in the active to passive narrative. A performance-flow relationship exists across both active and passive funds. Passive funds see larger fund inflows for better returns except during crises (2007 – 2009, 2020 – 2021). Active funds demonstrate higher performance sensitivities to all absolute and risk-adjusted performance measures, especially during crises and mixed during periods of normalcy.

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