The Active Construction of Passive Investors

Socio-Economic Review, mwz046,

How does algorithmic finance operate in society as it crosses the threshold into the hands of lay investors? This article builds on original ethnographic research into a new class of algorithmic trading programs known as ‘roboadvisors’—inexpensive, automated, digital financial platforms that enable ordinary people to invest very small minimum amounts and that rely to a large extent on passive, index strategies that follow the prescripts of Modern Portfolio Theory. The main argument of the article is that roboadvisors, representing an ethos of ‘low-finance’, are actively constructing passive investors by disciplining them through technologies that embody canonical models of financial economics. Roboadvisors and their algorithms reconfigure their users and objectify them…