Ever since 1975, when then-CEO John C. Bogle created the first index fund for retail investors at The Vanguard Group, there's been a raging debate about whether active management is worth paying for. Investors seem to have settled that question for themselves.
Just over half of assets in both mutual funds and exchange-traded funds are now passively invested, meaning they follow an index of some sort, according to research firm Morningstar. Over the last year alone some $408 billion has flowed into passively managed funds. Meanwhile, investors have yanked $329 billion out of actively managed funds.
It's not hard to see the appeal of indexing and why more people are becoming convinced of its charms, said Mel Lindauer, co-author of "The Bogleheads' Guide to Investing."