What’s the Role of Active Management in a World of AI, ETFs and Fee Pressure?
For years, active investing has been pronounced dead by passive evangelists, robo-platforms, and the odd ETF sales deck. And yet… here we are in 2025, and active managers still exist. More to the point, they’re still being chosen — not just by private investors, but by thoughtful financial planning firms building outcomes-focused portfolios.
So what’s going on? If passive is cheaper, faster, and “just as good,” why hasn’t active gone extinct?
The answer lies in a more nuanced, post-binary investment world — one where advice firms are increasingly focused not on active versus passive, but on what works best for the client, for the fee, and for the risk taken.
Passive Investing: From Revolution to Default
Let’s be clear: the rise of passive investing was one of the most important developments of the last 50 years. Low-cost market access, transparency, and investor discipline? All positives.
But somewhere along the line, “low-cost tracker” shifted from one tool in the box to a default setting, even in complex, high-risk or high-value client portfolios. When fees drive the discussion and long-term planning is sidelined, suitability can suffer — especially under Consumer Duty scrutiny.
Active Investing: Not a Bet — A Blueprint
The most common misconception about active investing is that it’s just a bet against the market. But that’s outdated. In the modern discretionary space, active means:
Mandate-based portfolio design: Structured around volatility, drawdown sensitivity, and economic regimes
Tactical responsiveness: The ability to adjust weightings when markets disconnect from fundamentals
Outcome awareness: Constructed not to “beat the market,” but to support real-life planning goals — like income stability, capital preservation, or intergenerational transfers
At Mitchell & Mitchell, our Compass and Atlas portfolios blend active selection with structural diversification. In short: we don’t make big bets. We make measured, evidence-based calls designed to align with the risk boundaries set between advisers and clients.
AI, Algorithms and “Efficient Everything”
In 2025, everyone is talking about AI. Algorithms are picking stocks, building portfolios, and even writing fund factsheets. But here's the reality: technology is only as good as the rules it’s given.
When volatility spikes or geopolitical risk flares up, active management isn’t about outsmarting machines. It’s about adding human judgment — weighing probabilities, not certainties.
And in a market where large caps have driven most passive returns, risk-adjusted outcomes matter more than raw headline performance.
Cost vs Value: The New Fee Conversation
It’s true that passive funds often come with lower charges. But that’s only part of the picture.
What matters to clients (and regulators) is value for money, not just price. That means considering:
Volatility-adjusted returns
Downside protection
Platform and tax efficiency
Personalisation via advisory suitability
Rebalancing methodology
Time-saving for adviser firms
In that context, a well-managed active solution — like the Compass or Atlas ranges — can deliver significant value relative to a basic basket of ETFs.
The Takeaway
Active management isn’t dead — it’s just evolved. In 2025, the best discretionary solutions don’t chase benchmarks. They solve for client goals, risk parameters, and regulatory alignment.
At Mitchell & Mitchell, we’re proud to offer adviser-led, actively managed models that respect cost but prioritise outcomes — not headlines.
Because in a world of AI, ETFs and fee pressure, the only real benchmark is client success.
Disclaimer:
The information contained in this blog is provided for general information purposes only and does not constitute financial, investment, or other professional advice. It reflects the views of the author at the time of writing and may not reflect the most current market or regulatory developments.
Mitchell & Mitchell Asset Management is a discretionary investment manager serving professional financial planning firms. Any references to investment strategies, asset classes, or market conditions are illustrative only and should not be interpreted as a recommendation.
Past performance is not a reliable indicator of future results. The value of investments and the income from them can go down as well as up, and investors may not get back the amount originally invested.
Clients should always seek personalised advice from a qualified financial adviser before making any investment decisions.
Mitchell & Mitchell Asset Management is authorised and regulated by the Financial Conduct Authority.
