Index investing has dominated headlines—and investor dollars—for more than a decade. But as markets evolve in the age of AI, a familiar question is resurfacing: Is active investing poised for a comeback?
That question anchors Season 2, Episode 2 of the Better Vantage podcast. Host Christine Kashkari sits down with Joe Davis, Vanguard global chief economist, and Jean Hynes, Wellington Management CEO, to explore how shifts in market structure, AI, and private markets may be reshaping the case for active management.
Since the global financial crisis, and particularly over the past 15 years, trillions of dollars have flowed into index strategies while many active funds have struggled to outperform. According to Hynes, years of quantitative easing and low dispersion have made differentiation difficult. Today’s environment, however, looks different.
Equity markets, especially in the U.S., are increasingly concentrated in a small number of technology and AI-driven companies. This leadership structure, unusually narrow by historical standards, raises questions about diversification, valuation, and future sources of return.
A key focus of the episode is AI. Hynes argues that AI may function less like the internet and more like electricity, reshaping business models across industries. For research-driven managers, this shift—alongside growing opportunities in private markets—could create new opportunities for long-term alpha generation.
Related links
Notes:
Custom Content from WSJ is a unit of The Wall Street Journal Advertising Department. The Wall Street Journal news organization was not involved in the creation of this content.
All investing is subject to risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss. Bond funds are subject to the risk that an issuer will fail to make payment on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. Investments in stocks or bonds issues by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.
Past performance is not a guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
Trading in cryptocurrency ETFs and mutual funds may involve significant risk and may not be suitable for all investors.
Private investments involve a high degree of risk and, therefore, should be undertaken only by prospective investors capable of evaluating and bearing the risks such an investment represents. Investors in private equity generally must meet certain minimum financial qualifications that may make it unsuitable for specific market participants.
Vanguard is owned by its funds, which are owned by Vanguard's fund shareholder clients.