Investors flocking into index funds—here's why

Investors flocking into index funds; here's why
Investors flocking into index funds; here's why

In addition to all the usual dilemmas over where to put money, investors have been in a heated debate over how to invest.

Specifically, the debate between active versus passive management has only heated up as more investors put their money into index funds and eschew the stock-picking strategy.

Lucas Jackson | Reuters

Tom Lydon, president of Global Trends Investments and editor of, thinks investors will continue to prefer exchange-traded funds, most of which are passively managed and track broad indexes like the and the Nasdaq.

ETFs have taken in a net $159.2 billion in 2014, bringing the total under management to $1.92 trillion, in a year that has seen total inflows rise nearly 13 percent, according to Mutual funds, meanwhile, have lost 2.5 percent over the past 12 months, according to the Investment Company Institute.

In a conversation at the Charles Schwab IMPACT conference with Finance Editor Jeff Cox, Lydon explains why he thinks investors will continue to favor ETFs, and where they will be putting their money.

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