Passive Funds Are No Match For Skilled Active Managers

The weight of articles and fund flows can make it seem like passive funds and ETFs will eventually overrun all active management. Index funds have certainly made great strides but so far are mostly focussed on the low hanging fruit of the most liquid and transparent sectors. The concept that it is very hard to beat the index after fees in large cap US equities is generally accepted. With so many fund managers and analysts covering this sector the opportunities for finding new, profitable insights is limited. However, index funds have yet to prove themselves where information is constrained and informed institutional investors are the minority. Small capitalization equities in Australia are an obvious example; if you buy...