A diversified portfolio can be successfully constructed to include a broad based index fund which obviously adds passive to the portfolio. What about some sort of smart beta fund that screens a broad based index for some favorable attribute? That may not be indexing in its purest form but many of the funds in this niche have proven to be valid. Chances are that if you own a stock like Johnson & Johnson (JNJ) or Pepsico (PEP) then you care at least a little about dividend growth. A stock like Google (GOOG) could fit numerous investment strategies.
Do you then balance out that equity exposure with things like bonds, gold or an absolute return fund of some sort? Chances are you do and so you are incorporating parts of many styles to create the methodology that is right for your clients even if you are your only client.
To the extent a diversified portfolio contains various exposures (the ones mentioned above and any others) then one of them will be your best performer in 2014 and sure it could be the part of your portfolio devoted to active management (either stocks you choose or an actively managed fund). Where no one can know what will be the best exposure a diversified portfolio should seek to have multiple types of market segments.
Important Disclosure: This article was prepared for informational purposes only. It is not intended as investment advice, it is not a recommendation and does not constitute an offer or solicitation to purchase or sell any security.