The U.S. House Financial Services Committee’s Capital Markets Subcommittee is holding a hearing on the changing relationship between active and passive investing and whether the current regulatory framework is keeping pace with market innovation, according to prepared opening remarks by Subcommittee Chairman Ann Wagner. The remarks position the hearing as an examination of what these market trends mean for retail investors and retirement savers, with a focus on investor outcomes, market efficiency and capital formation rather than on proposing a specific policy change. Wagner pointed to the wider range of index funds, exchange-traded funds and mutual funds now available to investors and said the Securities and Exchange Commission’s 2019 ETF Rule helped speed products to market and reduce red tape. She cited a 66 percent increase in the total number of ETFs between 2020 and 2024. The remarks also stressed that active investors remain important to price discovery, while passive products have delivered low-cost diversification and broad market exposure. In that context, Wagner linked the active-passive debate to access to capital and public offerings, arguing that capital formation should be supported throughout the lifecycle of a public company, including for smaller high-growth issuers before they are large enough to attract significant index-based investment.

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