The primary problem with asset management - both active and passive - is that most 'asset managers' are actually asset gatherers. It is abundantly clear, not least from the track record and shareholders letters from and interviews with Warren Buffett, that size of assets under management and subsequent investment returns are in most cases negatively correlated. Very few investment strategies scale, notably 'value' - and as Research Affiliates recently pointed out, despite being the best performing long-only equity investing strategy over the long term, 'value' is also the strategy most likely to get an adviser fired by his client for short term underperformance. When investors come to appreciate that size is the enemy of performance, the active industry will shrink back to a more appropriate level of AUM. I say when, but I really mean "If". Many funds are aggressively sold more than they are voluntarily bought.