Originally published at Financial Times | August 9, 2016
In the current low-return environment savers can be forgiven for asking, why should an ever-larger fraction of their meagre gains be paid to active asset managers?
After all, the alternative — passive investing — is beguiling. Passive funds offer many advantages, including a menu of low-cost opportunities to spread risk across markets, greater transparency versus the less visible picks of active managers and, for advisers, the benefit of not having to explain at some point why returns have been subpar. Unsurprisingly, nearly a quarter of a trillion dollars has left the active management sector in the past year, with much of it finding a home in ETFs.