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Active, Passive Or Smart Beta: Who's Winning?

As markets have grown steadily more efficient in recent decades, it has become more difficult - and expensive - for fund managers to deliver excess returns relative to benchmarks, or "alpha."

By John Mitchem

As markets have grown steadily more efficient in recent decades, it has become more difficult - and expensive - for fund managers to deliver excess returns relative to benchmarks, or "alpha."

Even though investment fund flows into passive strategies have accelerated steadily in recent years, active strategies still account for fully 70% of the $15 trillion in U.S. mutual funds. But active and passive are not the only choices. We are also seeing a booming trade in "smart beta" - an imprecisely defined cluster of rules-based strategies that avoid traditional cap-weighted index construction and seek profits amid market factors and inefficiencies. Watch the video in full below:

The “Beginning of the End” for Active Management?

  • Within indexing the lowest cost quartile of index funds is gathering the most inflows. While active has been “bleeding” flows to indexing, the lowest cost quartile of active funds has been gaining

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