Rory Maguire: Could smart beta really replace active management?

Over the past year, we have found ourselves increasingly being asked whether smart beta could replace traditional active management and so drive down investment fees. Computer-generated portfolios, the argument goes, could create strong alternatives to managers with a proven and predictable stylistic bias, such as Fundsmith or the Schroder Recovery team. The availability of ‘quality' and ‘deep-value' smart beta products would suggest their providers certainly think this is a possibility. Another strong argument is that we live in a world where there is so much data for humans to proce...