In the past decade, there's been a seismic shift from active to passive management, i.e., from mutual funds run by ersatz Peter Lynches to index funds and ETFs that track the market.
The fiduciary rule, which President Obama first advocated for in February of 2015 and the DOL formally proposed on April 14, 2016, accelerated that trend. If implemented, it would impose "impartial conduct" standards on financial advisors requiring they always act in their clients' best interests. That means finding the best investment fund possible, while the older, "suitability standard" required only finding an acceptable option for an investor's given risk tolerance. The best option, reams of academic studies have confirmed, is generally the low-cost one. And the lowest-cost funds are index ones.
In anticipation of the rule change, assets have flocked to index funds, driven by the cultural shift in the financial advisory community. Flows out of actively managed U.S. equity mutual funds leaped to $264.5 billion in 2016, while flows into passive index funds and ETFs were $236.1 billion, according to data provided by the Vanguard Group and Morningstar. That was the greatest calendar-year asset change in the last decade, during which more than $1 trillion has shifted from active to passive U.S. equity funds.