The case for investing in passive funds, such as exchange-traded funds (ETFs) or index funds, appears strong, which is why their share of the overall market is rising. Passive funds account for around 37% of the US market and 25% of the UK one. No wonder. Passive funds are considerably cheaper than active funds, which employ expensive fund managers and research analysts to pick stocks. Passive funds only alter portfolios when stocks enter or fall out of an index, and they do that based on the size of the company, not on any judgement.
This is more difficult in emerging markets, for small-
