Philippine money manager Wilson Sy says his strategy of betting on lesser-known companies outside his benchmark index has been upended by the flood of cash into passive index funds, a challenge he says more stock pickers will face. This according to an article in Bloomberg.

After generating gains of more than 2,600% over the twenty years through 2014, Sy’s fund is up by just 4% over the past five years, lagging the 19% return in the Philippine Stock Exchange Index, the article reports. “Sy pins much of the blame on the historic rise of index-tracker funds, saying they’ve siphoned cash from smaller stocks and made the securities too illiquid to buy,” the article says, adding, “He now sees little choice but to hew more closely to the index and try to add value through market timing—a notoriously difficult  endeavor.”

According to the article, Sy hasn’t completely abandoned wagers on smaller companies, but they represent a smaller proportion of his portfolio. He says, “The dilemma today is striking the right balance between big liquid names and small stocks that are quite cheap and offer value.” He plans to employ this strategy in a new international fund: “Instead of picking individual stocks for the fund, he intends to make bets on global market trends using macroeconomic analysis,” by focusing on index-tracking ETFs.