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Larry Kudlow spent part of his Fox Business show earlier this week walking through Wall Street Journal research on active versus passive fund performance with contributor Liz Peek, and the picture is unflattering for stock pickers. Only 27% of actively managed U.S. large-cap equity funds beat their benchmark over the last 12 months, and over the decade through June, just 13% of active managers beat their benchmark. The money has followed the performance, with passive investing near $15 trillion in assets and low-cost passive ETFs on pace to hit $1 trillion in net inflows for the first time this year.
Indexing has beaten stock picking again, as it has for most of the modern era. What deserves attention is how the industry has translated that victory into a marketing pitch for products sharing almost nothing with the strategy that…
