Why does the active vs. passive debate matter ?

 

The premise of active management is essentially that with enough skill, it’s easy to consistently outperform the market, or the benchmark. When this view was challenged decades ago, it sparked a longstanding debate with strong believers on both sides, and some in between.

The impact of the debate is far-reaching. It informs decisions about whether to use an active manager or invest in an index-based fund such as an ETF. It challenges the notion that alpha is what all investors should strive for. It has also created a need to gauge the suitability of both approaches across a range of time periods and asset classes.