I am absolutely shocked by this post.What you're inferring here...

I am absolutely shocked by this post.

What you're inferring here is that active managers are smarter than index funds under certain market conditions. We only need to look to Magellan to see the accuracy of that claim over the last 3 years, and S&P data which shows the majority of active managers underperform the index over long period of time.

You do understand that ETF issuers have become more sophisticated over time and are also issuing "smart-beta" products which use the same rules as active managers (without the qualitative screen) to employ risk-managed stocks at a fraction of their fees? You also do understand that an active manager employing a risk-managed approach is no guarantee that that risk-managed approach will prove effective or work? Again, look to Magellan.

I really am shocked by your post. What you completely missed is that most retail investors like me do not give two hoots about "risk-managed" positions. I could not care less about an active manager with a standard deviation of 10% versus 20% for the corresponding index fund that it's trying to outperform. Most retail investors aren't like you and many of the other people on this forum who have a drug-addiction to looking at stock prices each day. They're people with busy careers and families who just want their money to grow and don't want to pay expensive management fees for their investments.

Just last week my friend showed me financial statements form his advisor that put him in the MFS Global Fund, which has delivered below-index returns further squashed by a 2.35% MER, and 2% annual trailing commissions to the advisor. An annual fee of 4.35% - complete highway robbery. I was stunned and encouraged him to move his money to a simple S&P 500 ETF charging 6 basis points and he did.

Most investors today care about: low fees, being able to easily buy and sell on the ASX, tracking a reputable index which has a track record of growing over time. My portfolio delivers a sustainable 5.2% yield (paid monthly and quarterly) by investing in a basket of ETFs that hold high quality Canadian bonds, the ASX 200, the S&P 500 and TSX dividend companies with a track record of dividends that increase over time. Most of my growth has come from property. The two asset classes must go hand-in-hand.

I got paid cash in the bank reliably each week/month while my income grew thanks to a mix of rising rents, stable stock dividends and large exposures to value stocks in these indices which actually increased their distributions significantly this year. "Risk-managed positions" and "standard deviation" and expensive active management my a$$.

If any of you think that a change in market conditions will suddenly stop the influx of money into ETFs, and are accordingly placing bets into active management stocks, then you really are stupider than the average investor who is content with index returns for low fees and liquidity.