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The global mutual fund industry stands at around $26 trillion while the mutual fund space in the United States is around $12 trillion, just a couple of trillion smaller than the entire GDP of the US. Of this massive industry, 85-90% of all mutual funds are actively-managed. Active mutual funds faced their first stern challenge when indexing started gaining ground and investors started putting money into passive strategies through index ETFs and index mutual funds. However, that challenge came from another discipline of investing – from people who didn’t believe in active management.

So as far as active mutual funds were concerned, they were still the only option for investors who thought the market was inefficient and wanted to pursue active management. All that changed in 2008, when the first actively-managed ETFs were launched. Active ETFs are the real competitors of active mutual funds and may well be a much bigger threat to their existence than indexing ever was.