Joshua Levin, co-founder of OpenInvest, writes a piece for InvestmentNews about why he thinks mutual funds and ETFs are on the way out. With 80% of investors caring about sustainable investments that are tailored to their interests, he believes the future is about DCIs (dynamic customer indices).
In addition to financial and social responsibility data, client signals will become stronger than ever. For example, if one in four Americans have now deleted the Facebook app, why wouldn't they delete it from their portfolios? News breaks. Your client removes Facebook with a single swipe on her smartphone, and her entire portfolio instantly breaks apart and re-optimizes to keep tracking her benchmarks. No transaction costs. No distortion. High personalization. High engagement. As a result of declining transaction costs and other tech developments, equities funds are on their way out.