The asset management industry is in the midst of a huge structural shift

The asset management industry is currently in the midst of an enormous structural shift. Years of underperformance and closet indexing by high cost active managers is forcing investors into low-cost tracker funds. According to Bank of America Merrill Lynch’s latest weekly flows report, since 2002 there have been $1.4 trillion of inflows into passive ETFs verses $1 trillion of redemptions from active mutual funds. Year-to-date $260 billion has flowed out of US long-only equity mutual funds, 3.9% of industry assets under management. In comparison, US equity ETF’s have attracted $74 billion year-to-date, 3.3% of industry assets under management. Michael Mauboussin –…