Do Active Funds Have a Future?

Investors are swtiching out of actively managed funds into passive strategies as the draw of low cost, market hugging trackers grows

John Rekenthaler 4 October, 2016 | 10:25AM

This article is part of Morningstar's Guide to Passive Investing, helping investors make smart choices to meet their long-term investment goals.

Two years ago, I wrote a column that began: "Do active funds have a future? To cut to the chase: apparently not much."

When I said that, index funds were enjoying record-breaking sales and active funds were in net redemptions. But those numbers alone were insufficient evidence to conclude that active funds faced real trouble. Just as past fund performance proves to be an unreliable guide for the next few years' returns, so too can sales trends reverse. That active funds were bleeding assets in 2014 didn't mean that they would still be doing so in 2016.

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About Author

John Rekenthaler

John Rekenthaler  John Rekenthaler is vice president of research for Morningstar.

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