Retail investors are moving towards ETFs. Institutional investors can still make a little bit more money with active management. An extra 0.05% average return m

Retail investors are moving towards ETFs. Institutional investors can still make a little bit more money with active management. An extra 0.05% average return may not matter to a retail investor, but if you're managing a $35 billion fund, that's still an extra $1.75 million. I do expect the "alpha" gap between active management and passive index investing to close as robotrading becomes the norm. As alpha drops in a mass-robotrading scenario, trade volume tends to increase as more and different tactics are required to get the same returns. This arms race maintains market liquidity, while index funds provide a safe "baseline" for retail investors. It's really not a bad system.