These results suggest that at a size segment level Small Cap investors should find more alpha opportunity in those names with a lower passive ownership compared to names with higher passive ownership. While within Mega, Large, and Mid Caps alpha opportunity should be independent from passive ownership.

Sector wise, we noticed that some sectors have basically become beta plays such as Real Estate, Utilities, and Industrials and therefore alpha generation should be more challenging due to reduced alpha opportunity. On the other hand, for the remaining sectors that still present a good level of linear relationship between passive ownership and alpha opportunity, investors should find that names with lower passive ownership have more room for alpha generation

 

Eoin Treacy's view

Here is a link to the full report.
 
The proliferation of exchange traded funds is a major innovation in terms of market access since retail investors now have the ability to invest and trade in sectors and countries once only open to the clients of investment bank structured product desks. The other side of the equation is that the speed with which the product range has expanded means reading the prospectus and doing one’s due diligence is essential. 

The result, as the above report points out, is that an investor seeking to build a portfolio now has the ability to use funds to gain both targeted and wide market access while judiciously choosing individual stocks to boost alpha.