Much of the attraction of passive investments such as exchange-traded funds is that they are cheaper than active management. However, the implicit costs of strategies are often hidden from investors, according to Michael Aked, director of product design at index provider Research Affiliates.

Investors in passive products can see the tracking error (the difference in the return of their investment and the performance of the index it tracks). However, this does not capture the impact on the market of the product's trading activity, with its buying and selling to rebalance the portfolio in line with the index potentially changing the price of the securities.