Well, it depends on the quality of the EM fund. I agree that passive investing even with Emerging markets is a perfectly rational way to invest in this sector. At the same time, all the data shows a top 25% EM fund can clearly deliver out-performance over 10 years. Rather than bore you with dozens of articles I'll post a few graphs. Morningstar and others have stated that "low costs/expense ratios" are the major component of market beating returns over a long period of time. When tax efficiency and expense ratios are factored into the equation passive investing likely beats all sectors of active management. However, if you have retirement money then the tax efficiency doesn't factor into the equation allowing the investor the option of active management in certain sectors. Doze is correct that active management isn't required at all in any sector but I believe the evidence is there for active management to outperform in certain sectors of the market. Thus, I have a portion of my total assets invested with active fund management.