Tracker funds are now worth £74.2bn, accounting for 9.6% of the total industry funds under management, up from 8.9% in 2012 and 6% in 2003.

Figures from the United States are even more startling. In 2013, US investors poured a record $115bn into index mutual funds, almost double the previous high and significantly more than the $38.3bn which they invested into actively managed mutual funds.

Many investors are now either using passive funds or are contemplating doing so. However, it’s difficult to get an objective view on whether they should be considered for part, or even all, of an investment portfolio.

Investment companies clearly have a vested interest in selling actively managed funds, where charges are higher and they can differentiate themselves and earn bigger margins, than selling passive funds.

Most execution-only brokers and platforms have also had a vested interest in promoting active funds over passive funds as they currently earn more commission on active funds. This could be why execution-only firms promote active managers in mailings to their databases or in recommendations in the financial press, but you rarely see them extolling the virtues of passive alternatives.

Thankfully, from April, execution-only firms will no longer be able to take commissions on new investment and pensions business. You’ll have noticed a number of execution-only platforms changing their charging structures in recent weeks in preparation for this. It’s because they’ll have to earn their money directly from their customers rather than from product providers through charges taken out of their customer’s investments.

However, many execution-only firms could still have a vested interest in recommending active rather than passive funds. This is because they offer research or fund recommendation services to their clients. This allows them to differentiate themselves from the competition and potentially to charge more because their customers are benefiting from their valuable research and knowledge. This research might not seem so valuable if these companies simply recommended passive funds.

My perspective is slightly different. I work for a firm of independent financial advisers. This means we have no allegiance to any particular companies and as financial advisers (rather than execution-only brokers) we’ve been unable to take new commissions on investment and pension business since the beginning of 2013, even if we wanted to.

We do research investment funds although don’t publish buy lists or recommendation lists as a way to attract new clients or persuade people to buy. All of our advice is given face-to-face with our clients.

I’m not surprised to see investors putting an increasing focus on passive funds. They pay extra charges for active funds and many active managers haven’t rewarded their investors with out-performance.

It can be most difficult for active managers to outperform in more efficient markets such as large cap UK and US equities. Here information about individual companies is widely known by the market so managers will struggle to find opportunities which their rivals have missed.

In contrast, there is scope for active managers to find opportunities in less efficient areas such as the emerging markets or in small cap companies, which others might have not recognised or overlooked.

Therefore, for many investors the best approach could be to hold a combination of active and passive investment funds. Active funds should be held in sectors where the fund manager has a better opportunity to out-perform but passive funds should be considered where out-performance is less likely.

Some will argue that active funds generally have outperformed in recent years although this is largely because mid and small cap stocks have outperformed larger companies. By their very nature, most tracker funds will have a high weighting in large companies. However, with many mid and small cap stocks now more expensive and with larger companies potentially offering better value, it might be more difficult for active managers to outperform in the future.

With a growing focus on investment charges, active funds need to demonstrate that they can add real value over the longer term otherwise they will find even more money heading toward passive investments.