Don’t look now, but somebody in mutual fund land (and investment management) better sit down at a typewriter (figuratively) and start to make the case for active management. A staple of the 80s and 90s, the “benefits of active management” story hasn’t been told very successfully since the great Y2K scare. And under the bed somewhere, there are lots of bogeymen waiting to pounce!

More and more, active managers are taking a beating in the press, with some suggesting that as few as 1 in 4 are able to beat their index. Even Legg Mason’s iconic Bill Miller stubbed his tootsie in 2006—albeit for the first time in 16 years (Now that’s one stud you’d like in your starting rotation!).

With sales of ETFs, indexing and top down allocations all “en fuego” as Everett would say, mutual funds may be quietly slipping into the “disintermediation crosshairs.” Unless somebody in marketing starts to make a case for all those expensive PMs, they both may find themselves going the way of the open outcry trading floor.

Do you still believe in active management?
Is anybody telling that story successfully?
Will the stranglehold that funds have held on retirement plans give way to ETFs and other “passive” investments?

Or is that blob under my bed just a giant dust bunny?

What do you think?