My friends dad just sent me this article, which is very interesting. It talks about how Blackrock is basically making a big bet on 'passive investing' as a reaction to all the trends of people moving money out of active management and into passive index funds.
It also has some great stats that I plan to use to warn my friends about the woes of high-cost, actively managed mutual funds, like this:
"According to data from Morningstar, only 11 percent of BlackRock’s actively managed equity funds have beaten their benchmarks since 2009."
Boom!
Nonetheless, when reading the article it made me think of something off topic. (by its mention of "United States stocks", here: Still, there is no mistaking the larger message: Expensive, actively managed funds looking to make a mark picking United States stocks must adapt to the new realities at BlackRock.)
I'm sure I'll be crucified for this on this forum, but humor me. Could a compelling case be made for the merits of ACTIVE management in emerging economies? Arent emerging markets more of an environment for picking winners and losers, arbitrage, ability, insights, conviction, etc.? Given the amount of disruption, information assymetry, complex legal environments / government politics, etc. I could be convinced that there is and will continue to be legitimate 'room' for active management to beat out indexes in international emerging markets. Now that the US and developed economies are entrenched in what I think is pretty darn close to an actual 'efficient market' (defined loosely here as "near real time data being reflected in prices immediately"), will there be a Warren Buffet or Peter Lynch of emerging economies over the next say 50 years?