When Howard Hansen and Edward von der Linde co-managed the mid-cap value strategy at Lord, Abbett & Co. from 1997 to 2008, they worked with a dedicated team of four analysts until the fund company restructured its investment operations and reassigned all analysts to a central research group that supported both growth and value strategies. Prior to eliminating the team structure, Hansen and his colleagues had conducted their own analysis independently.

"The new structure was better suited to managing money in a more benchmark sensitive style," said Hansen. "My partner and I wanted to move back to traditional investing."

To Hansen, traditional investing is about taking an equity position in a business rather than breaking down large indexes and replicating them with computerized trading.

"The advent of cheap and powerful computer processing has enabled the money management industry to slice and dice the stock market and manufacture aggregated investment products that enable investors to get exposure to broad market indexes like the S&P 500 and the Russell 3000," said Hansen.  "We think investors who buy these products end up with an over diversified portfolio that may not perform as anticipated. But for those in the money management business, index funds are great because they have limitless capacity to accumulate the assets against which fees can be charged."

"We get away from the pack in our contrarian value fund by identifying businesses that will experience improving trends and concentrate our portfolio around that theme. We only buy and own stocks. We don't' sell short, use derivatives and we are unconstrained by sectors," said Hansen, who is critical of big-name money makers who create complicated index products positioned to accept inflows more than to outperform. 

Some advisors would argue that the playing field is more level as a result of the proliferation of indexes and ETFs.

"Indexing is merely reflecting the market as a whole for investors who want to invest for the long term rather than trying to guess sectors. Indexing is the thing to do when you don't have the knowledge to select particular subsets of the market," said Ronald Cornew, an economist and president of Market Consultancy Corporation in Miami, Fla.

Nonetheless, Hansen left Lord Abbett in February 2009 to join his partner Linde in creating Linde, Hansen and Company. The duo has managed separate accounts for two years and launched the Linde Hansen Contrarian Value Fund on February 8, 2012.

"We continue to deploy the same investment process as before but in our new incarnation we are more concentrated," said Hansen. "If you have conviction and courage to buy stocks in a concentrated manner, you can benefit return-wise to a greater degree."

If it sounds like Hansen is critical of index mutual funds, it's because of his belief that the mutual fund industry has become too beholden to indexes.