Goodbye to Active Management?

A very interesting USA Today story points to investors’ flight from actively managed mutual funds largely in favor of index funds. In general, mutual funds with active management — often mathematically complex back-tested strategies that require lots of human effort to devise — underperform market indexes that simply buy every stock in a certain index. Smart investors have known this for a long time. I think it’s a good data point towards showing that it’s impossible to predict — or plan — any really complex system.