There is no such thing as "passive investing", only index investing and non-index investing. To be truly passive, you would have to own a share of everything in the world: all bonds, all private equity, all real estate. This is difficult, as well as a recipe for being scammed.
A 100% public equity investor is not passive, because they are choosing equity over debt, public over private, etc. Most index investors do not invest in global equities, but focus on more developed countries. Emerging markets can be a recipe for getting scammed, without the regulatory protections of public companies in more developed jurisdictions.
We talk of the equity risk premium, which is assumed to be greater than the risk premium for bonds, although nobody knows what it is. Really every stock has its own individual risk premium.
The doctrine of "core competencies" holds that businesses should focus on what they're good at, and outsource everything else. But if a business can do two profitable things, why not do both? The answer is that a business should perform activities which have a return greater than the business's cost of capital. The cost of capital is determined by the investors' perception of risk, so one business may have a higher cost of capital than another.
