\label{section-3}
The value of the universe of investable assets has increased over time,
fueled fundamentally by population growth (which typically expands the
value of the underlying corporations) and economic growth. This type of
growth is also referred to as beta return or the above-cash market
return. To benefit from such returns, investors do not require much
investment acumen other than smart diversification.
The relative size of each pool changes over time due to investor
preferences, which is driven by growth expectations, risk perceptions,
total available liquidity, and investors’ idiosyncratic views. For
example, one of the best examples of disruption is the low cost index
fund movement, pre-eminently Vanguard. As a result of the sector’s
growth, the proportion of assets managed by money managers in
traditional active core asset classes has shrunk dramatically from
nearly 60% of assets in 2003 to less than 40% today. This will likely
accelerate, as net flows into traditional active core asset classes are
negative (See Picture 7).