Net outflows for actively managed funds over the past five years have been $443 billion — while net inflows for passive funds were $245 billion. Nonetheless, some advisors and experts are predicting a comeback for actively managed investments. Many experts are predicting slow market growth, which favors picking high-quality, less-leveraged companies. The move to active management also could be precipitated by an increase in interest rates.
Some advisors use a combination of active and passive investments, spending time to find the few managers who beat their benchmarks. Others recommend looking for low-cost active funds, and some are using so-called “smart beta,” heralded by DFA, which is attracting other big fund complexes like BlackRock, Schwab and Northern Trust.
