Active management in a passive world

Active management in a passive world  By Rocco Pellegrinelli, CEO, Trendrating

It’s a difficult time to be an active manager: according to S&P data, 83% of US and 86% of European equity funds underperformed their benchmarks over the last decade. In parallel with this underperformance, index-tracking funds are enjoying a moment in the sun: they already account for 40% of the $9tn U.S. market in equity mutual funds and exchange-traded funds (ETFs). The allure of uncertain – but potentially high – returns is slowly diminishing in favor of more assured (if lower) profits.

No fund manager actively sets out to underperform, and many will be as frustrated by the last ten years as their investors. Nonetheless, there is a...