The stock market is on the cusp of reaching a key tipping point soon in the balance between active and passive investing.
The share of long-term invested US assets held by active funds will slip below 50% in a few years after accounting for 53% in 2022, ISS said.
By 2027, that share will shrink further to 44%, while passive investing will reach 56%.
These 13 members of Congress have traded stock in Elon Musk’s companies during 2022
After buying Twitter, Elon Musk now leads two companies — Twitter and Tesla — with popular stock.
Insider found more than a dozen members of Congress or their spouses traded stocks in one or both companies in 2022.
Congress is debating whether members and their families should be banned from trading individual stocks.
After completing his purchase of Twitter, serial entrepreneur Elon Musk — the wealthiest person in the world — is now the leader of two publicly-traded companies: Tesla and soon-to-be-private Twitter.
The two companies, which are cumulatively worth billions, have traded for years on the NASDAQ stock market, sometimes even by some of the nation’s most powerful politicians and their families.
Insider found that at least 13 members of Congress or their family members personally traded stocks in Twitter or Tesla in 2022.
Congress, meanwhile, is currently debating whether its members, their spouses, and dependent children should even be allowed to buy, hold or sell, individual stocks.
Musk, for his part, has emerged as an unavoidable global presence deeply involved in media, communications, transportation, and even space.
Here are the 13 members of Congress who reported stock trades in Twitter and Tesla in 2022, according to an Insider analysis of lawmakers’ personal financial disclosures filed with Congress:
Rep. Nancy Pelosi, a Democrat from California
On March 17, 2022, House Speaker Nancy Pelosi’s husband, Paul, exercised 25 call options (2,500 shares) of Tesla stock at a strike price of $500, with the trade valued at between $1 million and $5 million
Rep. Pat Fallon, a Republican from Texas
Rep. Pat Fallon purchased stock in Twitter valued between $15,001 and $50,000 on January 19, 2022
Fallon purchased stock in Twitter valued between $50,001 and $100,000 on January 24, 2022
Fallon sold between $50,001 and $100,000 worth of Twitter stock as part of the company’s corporate stock buyback after Musk took the company private
Sen. Sheldon Whitehouse, a Democrat from Rhode Island
Sen. Sheldon Whitehouse purchased stock in Tesla valued between $15,001 and $50,000 on January 28, 2022
Rep. John Garamendi, a Democrat from California
On January 14, 2022, Rep. John Garamendi’s spouse sold between $1,001 and $15,000 worth of stock in Twitter
Rep. Mike Garcia, a Republican from California
Rep. Mike Garcia purchased stock in Tesla worth between $15,001 and $50,000 on January 25, 2022
Garcia purchased stock in Tesla valued between $15,001 and $50,000 on February 23, 2022
Garcia purchased stock in Tesla worth between $50,001 and $100,000 on September 29, 2022
Rep. Josh Gottheimer, a Democrat from New Jersey
On January 26, 2022, Rep. Josh Gottheimer and his spouse jointly sold stock in Tesla valued between $1,001 and $15,000
On January 31, 2022, Gottheimer and his spouse jointly sold between $1,001 and $15,000 worth of Tesla stock
On February 7, 2022, Gottheimer and his spouse jointly purchased Tesla stock valued between $1,001 and $15,000
On May 26, 2022, Gottheimer and his spouse jointly purchased between $1,001 and $15,000 worth of Tesla stock
On November 2, 2022, Gottheimer and his spouse jointly sold between $1,001 and $15,000 worth of Tesla stock
On November 9, 2022, Gottheimer and his spouse jointly sold between $1,001 and $15,000 worth of Tesla stock
Rep. Kim Schrier, a Democrat from Washington
On March 22, 2022, Rep. Kim Schrier’s spouse, David Gowing, sold stock in Tesla worth between $250,000 and $500,000
On March 22, 2022. Rep. Kim Schrier and her spouse jointly sold stock in Tesla worth between $250,000 and $500,000
Rep. Vicente Gonzalez, a Democrat from Texas
On May 29, 2022, Rep. Vicente Gonzalez purchased Tesla stock valued between $100,001 and $250,000
Rep. Chris Jacobs, a Republican from New York
On July 18, 2022, Rep. Chris Jacobs purchased stock in Tesla valued between $1,001 and $15,000
Rep. Kathy Manning, a Democrat from North Carolina
On September 12, 2022, Rep. Kathy Manning’s husband, Randall Kaplan, sold stock in Tesla valued between $1,001 and $15,000
On October 12, 2022, Manning’s husband purchased stock in Tesla valued between $1,001 and $15,000
Rep. Ro Khanna, a Democrat from California
On September 5, 2022, Rep. Ro Khanna’s dependent child sold Tesla stock worth between $1,001 and $15,000
On September 19, 2022, Khanna’s dependent child sold Tesla stock valued between $1,001 and $15,000
On September 29, 2022, Khanna’s dependent child purchased Tesla stock valued between $15,001 and $50,000
On September 29, 2022, Khanna’s spouse, Ritu Khanna, purchased stock in Tesla valued between $1,001 and $15,000
Rep. David McKinley, a Republican from West Virginia
On September 21, 2022, Rep. David McKinley purchased stock in Tesla valued between $1,001 and $15,000
Rep. Robert Aderholt, a Republican from Alabama
On December 5, 2022, Rep. Robert Aderholt’s child sold stock in Tesla valued between $1,001 and $15,000
14/14 SLIDES
The stock market is on the verge of a critical tipping point as passive funds overtake active funds in the next few years.
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According to a report from ISS Market Intelligence, the share of long-term invested US assets held by active funds was 53% in 2022.
That will soon dip below the 50% threshold, and by 2027 it will drop further to just 44%. Meanwhile, the share of assets held by passive funds will reach 56% by then.
ISS said the brunt of the market share will shift toward index exchange traded funds, which should see $2 trillion in new sales, while active mutual funds will see net $1.4 trillion in redemptions by the end of 2027.
Investors have withdrawn roughly $258 billion from active mutual funds per year since 2015, according to Morningstar Direct data cited by the Financial Times. By contrast, passive mutual funds added $138 billion on average over the same time period.
In 2022 alone, active mutual funds experienced their largest ever amount of net outflows, which totaled $1 trillion. Passive mutual funds saw the opposite, with $53.8 billion in net inflows in 2022.
Because so much of the market is dominated by index funds, investors have “outsourced” voting decisions to proxy advisory services ISS and Glass Lewis, who now hold too much sway, he said.
