Passive Investing and AI Reshape Asset Management

Low‑fee passive investing — driven by widespread active managers’ underperformance — has reshaped market structure and helped keep equity valuations elevated. Fintech and quantitative platforms using AI/ML and multi‑factor scoring (for example, 5starsstocks) are attempting to beat traditional stock‑picking and simple index exposure. Individual investor returns often trail fund performance because behavioral biases like chasing past winners and panic redemptions erode long‑term gains, making disciplined approaches such as dollar‑cost averaging and diversified index/ETF exposure important. For real assets, hands‑on, tailored asset management that matches an asset’s specific needs to specialist operators remains a proven path to generate alpha. Smaller specialist advisory firms (for example, Meritage Portfolio Management, $2.4bn AUM) and ongoing personnel moves at active houses (including hires and leadership changes at firms such as Magellan and Perpetual) illustrate consolidation and succession pressures in active management.