Kopin Tan does a great job sizing up the pluses and minuses of the active/passive debate. While business schools always teach that you don't want to just compete on price, I disagree with them to some degree on this point.
Since superior performance is very hard to definitively prove in most cases, active managers should be decreasing their expense structures or risk being "road kill" by the passive management eighteen wheeler barreling down the road. While you easily could disagree with this viewpoint, the swift and large move to passive strategies is clearly indicating the trend.
The industry is evolving and changing. You don't want to be selling "buggy whips" to automobile buyers!
An immobile rock in a river will erode with the constant current. While a leaf will flow with the current and adjust to changing conditions.
