This is as true for fresh produce markets found across the UK with their canny fruit and veg traders, all the way through to the most sophisticated of international stock exchanges with their own active participants.
Active investing involves creative destruction: capital is more efficiently allocated over the long-term as those that do so wisely succeed and flourish, while those that make poor decisions ultimately fail and go out of business.
The passive industry, although it is an undeniable boon to savers content to track an index at low cost, relies on the active management industry to establish prices.
The overall societal benefits of the active industry are crucial and should not be downplayed.
We can but hope that Mr Woodford’s investors’ ability to trade their holdings is quickly restored. And the regulator should absolutely ensure everyone plays fairly.
But, as all-consuming as the crisis appears at the moment, the active management industry is bigger than one man.
Individual managers will succeed or fail, but the industry can, and should, carry on regardless. And while it does, it will remain the source of much opportunity.
Nic Spicer is UK head of research at PortfolioMetrix
