Making the case for active investment management

I came across an article on Marketwatch.com last week, and it's a controversial one. We hear a lot about the benefits of index tracker funds. These are the low-cost funds that aim to replicate the performance of a market index. It's a style of investing sometimes called passive investing, although of course there are still active decisions to make about which index to track. The Marketwatch article is a write-up of a new study, which throws into question a big part of the rationale which is driving investors towards index tracker funds and exchange traded funds, ETFs. That rationale? That even skilled investment managers can't beat the market, so there's no point in paying them to try, so you're better off sticking with index tracker funds instead.