How active v passive battle is affecting job prospects

With active funds facing pressure from passives, recruiters have debated whether there is still a hiring market out there for active managers?

In recent years, there has been much debate about the place for active management in the face of passive players. Morningstar previously stated that active managers are likely to face pressure to remain competitive, and that outperformance is critical to justify their position in the market. 

Other fund managers have been hit by the internalisation trend at superannuation funds which has seen them reduce their usage of third-party managers. 

In its latest Australian Asset Manager report for the second quarter of 2025, Morningstar equity analyst Shaun Ler said: “With large passive shops using scale to lower prices to attract assets, active managers will likely need to trim pricing to counter passive competition. We expect further fee margin compression for all our covered managers for the five years to fiscal 2029.

“Traditional active managers are likely to continue losing market share, particularly to ETFs, which offer lower fees and efficient access while replicating simpler active strategies.”

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Not only this, passive firms tend to have fewer investment staff than active ones which causes a reduction in management roles available, and several asset management firms have closed their Australian equity strategies due to cost pressures.

Last year, First Sentier Investors announced it would be closing four investment teams across Australian Fixed Income, Global Credit, Equity Income and Emerging Companies teams who encompassed 10 funds combined. Meanwhile, T. Rowe Price closed its Australian Equity strategy last April as it believed it was unable to achieve sufficient scale and its Australian equities team moved to contributing research for its global strategies.

However, others have argued that the current market volatility caused by US President Donald Trump is the ideal environment for active managers who can navigate the market movements as well as a growing number of boutique players. Active fund managers are also broadening their ranges with a greater usage of active ETFs to reach new investors. 

But what does this mean for those individuals working in the active space? Money Management spoke to two recruiters about whether active management is facing hiring difficulties?

• Yes – Mischa Bennett, managing director at Capital Executive Search

“Active equities stand out as a part of the market that is shrinking; it is a painful part of the market. It is not panic stations yet, but it is interesting to see how this will play out over the next 10 years if it keeps shrinking like this. Nor are you seeing active management teams breaking away to set up their own shops anymore.

“The cost-cutting is hitting hardest at the senior analyst and the deputy portfolio manager level. It is not a great feeling to be an active manager looking for a job right now, and some are retraining or reskilling to go into fields like investor relations.

“Candidates in the space have to really love active management and be super passionate or be on the sell side. 

“More fund closures are definitely on the horizon. There are some standout managers who have found the secret sauce, but those who are struggling will likely reduce or rationalise their product ranges or they will be unable to break even.”

• No – Chris Hanley, manager of financial services at Michael Page

“Active thrives in times of volatility. This is the ideal time for active managers, and we’ve found recruitment to be buoyant. 

“But you do need to be specialised; the ones that are doing well are those managers who are robust and high-performing. If that’s the case, then active is an exceptional place to be, especially when markets are less efficient and they can find unique opportunities.

“Some investors want alpha and are willing to pay for managers who can deliver it so long-term, active management likely won’t disappear; it will just evolve. Technology like artificial intelligence and new strategies like smart beta and enhanced indexing are evolving active management and creating new opportunities.”