Active investment managers frequently blameunderperformance on monetary policy andthe long bull market, arguing that a lack ofdispersion in returns made it impossible for skilledmanagers to demonstrate their talent. It isconsequently claimed that a more choppy macroe-conomic environment with higher interest rates willfinally reveal the flaws of index investing and vindi-cate alpha-seeker. In our opinion, there is littleevidence to support this hypothesis.

• Various studies have revealed that contrary to popular beliefs, the dispersion of equity market returns during the low-interest rate period was not unusually low.
• The argument that the underperformance of active managers can be blamed on monetary policy and a lack of opportunities to generate alpha is not supported by the data.
• True alpha is rare and investors seeking it are at risk of falling prey to hindsight and survivorship bias.
• We believe that the active/passive debate deserves to be led more nuanced, including acknowledging stock and bond pickers' role in ensuring efficient markets, the merits of differentiated, fairly priced products but also the value of having a substantial allocation to pure market beta as a portfolio's core.