Isn't active investing a zero sum game? Imagine a market with only two people and an average ROI of 7%. If then somebody has a 10% ROI through active investing then it follows that other one who also invests actively only gets a 4% ROI%.

With passive investing you invest in a stock because you think the company's value will grow in the future. They are building a new factory or entering a new market, etc... The added value will be represented by a higher stock price which you can sell to obtain your investment returns.

>The social function of active management, in a capitalist society, is that it seeks to direct capital to its most productive end, facilitating sustainable job creation and a rise in the aggregate standard of living.

What if an actively managed fund gives me a 10% return but a 4% fee and a passively managed fund gives me a 8% return but only a 1% fee? Wouldn't the passively managed fund be the most productive from the investors point of view?