After active managers fell in lockstep with their benchmarks and all of the major indexes in 2008, many institutional investors are paring back their investments with active managers in favor of low-cost passive alternatives, The Wall Street Journal reports.

“Active managers have not given us the added performance in a down market that we hoped for,” said Bill Atwood, executive director of the Illinois State Board of Investment, who recently moved $400 million of the state’s $9 billion portfolio into index funds. “Now that we think we’re close to the bottom, we feel we can access the upside just as well with index managers,” he said.

Indeed, a recent survey by Greenwich Associates found that 20% of institutional investors recently moved assets from active into passive management, up from 4% who expected to make that shift last October. And the Bank of New York Mellon forecasts that a record number of active asset managers will be replaced by index funds in the second half of the year.

Indeed, in announcing BlackRock’s $13.5 billion acquisition of Barclays’ asset management division, BlackRock CEO Laurence Fink specifically cited investors’ increase appetite for low-cost index strategies.

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