Janus Henderson co-CEO Andrew Formica has called out the industry for not doing "a good enough job" at educating investors on the benefits of active management.
Formica became co-chief executive with Richard Weil in May following the merger of Henderson Global Investors with Janus Capital last year.
He said: "The industry is not making a clear argument for active management. It has not done a good enough job in quantifying the benefits of active management to investors. We have to do better."
Formica said a big issue hindering active management was the ongoing preoccupation of clients and the media on the cost of investment.
"There is too much focus on the costs of investment management and not on value. If you only focus on costs then passive will always be better but if you look at value then we should be judged on our long-term return profile over three, five years, not just our short-term quarterly performance."
In an environment of increasing volatility and rising interest rates, Formica said this meant active management was becoming more relevant than it has been before.
"2018 will be all about active management, we have just had a period of unprecedented low volatility and we now have significant geopolitical risk, political instability and rising interest rates.
"Markets will be far more volatile in 2018 than in 2017 and we are already seeing this quicker than I would have expected. In this environment, you want to have an active manager who is thinking about these issues and adjusting portfolios.
"If you slavishly follow an index, you could wake up and find yourself significantly down and have no chance to mitigate this. Passive has a role to play but only a role, it should not be your whole portfolio."
He said one particular benefit of active management was managers' role in corporate governance.
"Only active managers can truly hold companies to account and they are the ones who will be able to buy and sell companies based on the outcome of those discussions. They are the true purveyors of governance."
Meanwhile, Formica said only one in 10 candidates for roles in its investment division were female, which hindered the firm's ability to increase diversity.
"Having diversity - whether gender, ethnicity, education - is a massive benefit for a company," he said.
"Only 10% of our fund management and investment roles are female but then only one in 10 candidates for those roles are female so it is very difficult.
"It can't be changed overnight but we have to try. It will take a relentless focus on this over decades before we see changes."
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