Rise of passive puts a new perspective on fund selection

For all the talk of the demise of active management, investors struggling to select the right passive fund may ultimately find it easier to buy an active vehicle. By doing so, they put their trust in the fund manager and their ability to make certain asset and factor-allocation decisions. There are undoubtedly skilled managers who can ride market cycles successfully and pick the winning securities, but for an investor, the challenge remains to identify such managers who also charge a reasonable fee.

Hortense Bioy is director of European passive funds research at Morningstar