The Hidden Risks of Passive Investing
Submitted by JMB Financial Managers on June 17th, 2025
It is no secret that investment dollars have been shifting from actively managed investments to passively managed investments (i.e., Index Funds). There’s one number that explains a good portion of this phenomenon: 13.80%. The compounded annual growth rate (CAGR) of the S&P 500 Index over the last 15 years ending December 31, 2024, was 13.80% per year. This high rate of return has given birth to, among other things, an explosion of exchange-traded market index funds seeking better performance.