In sport, stars like Federer and Ronaldo beat the average year-in-year-out. But in finance, there is no manager who can beat the index every year. Why? One answer might be that good fund managers attract more clients, which disrupts their strategies. Another that managers are susceptible to fashions. But the most likely explanation is that active managers' success owes to luck.
In the near future, financial services will be dominated by a few "mega-managers" offering both active and passive services. But market concentration and the growth of passive investing do not have to spell the end for active managers. As Fidelity has shown, managers who are open to technology and new ideas can adapt.
Securities lending has long been practiced by physical ETF issuers; some have been known to lend out up to half their funds' securities. But who deserves the gains from the lending? Investors or the issuer? Brad Lamensdorf of Active Alts Corp believes it is the investors. And he's making a point of it.