Mr Norman recognises that even with single-digit charges coming to market, there may still be further to fall.
“You’ll always have the cost of running the fund, administration, fund accounting, as with any active fund, but the costs of trading will come down, as passive funds aren’t traded.”
Article continues after advert
While scale improves efficiencies, concerns over capacity are irrelevant, unlike the active space providing the flow is hitting the market.
“Once you get past a certain size, say half a million, the next two or three million doesn’t cost you any more to run – so for a liquid index like the S&P 500 or the FTSE you could theoretically run an infinite amount of money,” says Mr Norman.
Sam Shaw is a freelance journalist
Page 2 of 2
