The Swiss Finance Institute (SFI) has selected LSE's Professor Dimitri Vayanos, along with co-authors Hao Jiang and Lu Zheng, for its Outstanding Paper Award 2024. The prize, which distinguishes an unpublished research paper expected to make an outstanding contribution to the field of finance, was given for 'Passive Investing and the Rise of Mega-Firms'.
The paper focuses on how passive investing affects stock prices and the economy. Professor Vayanos said: "Our research shows that the huge shift from active to passive investment strategies that has taken place over the past three decades is not neutral. Choosing the weights of one’s portfolio mechanically to equal the market-determined weights in stock indices such as the S&P500 or the FTSE100 favours the largest firms in these indices and biases the aggregate stock market towards overvaluation. We are delighted that this research has been recognized with the 2024 Swiss Finance Institute Outstanding Paper Award."
The key learnings of the SFI Outstanding Paper 2024 will be presented at the SFI Research Days in June 2025. The winning paper can be accessed at https://www.nber.org/system/files/working_papers/w28253/w28253.pdf.