One side of the debate says the world continues to get smaller, with companies of all sizes increasingly able to produce and sell goods and services anywhere in the world.

Theoretically, the country of domicile then becomes less important than the sector in which the firm operates.

If this is the case, then spending your time carefully selecting sectors to own should have a larger impact on relative returns than performing the same exercise with countries.

On the other hand, those arguing for the primacy of country selection point to differentiated market regulation, consumer tastes, demography and financial characteristics among many other factors.

Given the drastic recent movements in the resources sectors, one might expect that the importance of sector selection has increased recently.

When we plot the rolling difference of annual MSCI World best and worst sector returns in common currency terms, it turns out that it has, but the long-term downward trend remains in place.

Looking at the difference between third and first quartile sector returns to remove outliers and obtain more comparable statistics also shows a similar pattern – the long-term downward trend in the opportunity set for sector selection remains intact for the moment.

There have been cyclical interruptions to the downward trend in the past, notably coinciding with the dotcom boom and bust.

For the difference between third and first quartile, the current 10-year average is still well above previous lows seen in the 1990s.

However, when it comes to the difference between best and worst performing sectors, the trend has now reached new lows.

Country selection is getting less rewarding too. As there are more developed countries than sectors (currently 23 countries compared to 10 sectors), it is not surprising that picking the best and worst countries yields higher results than picking sectors.

Comparing the difference between third and first quartile should make the benefits of country and sector selection a bit more comparable. On that basis, country selection remains a bit more rewarding for now (the ten-year average difference is at 14.5 per cent when picking between countries compared to 12.5 per cent for sectors), but the benefits of regional selection have nonetheless decreased significantly.

The decrease in selection benefits has been most pronounced when looking at developed market regions. On a trend basis, 20 years ago the difference in annual performance between the best and worst performing region was nearly twice as high as it is today.

Similarly, when comparing third and first quartile, a nearly 50 per cent reduction has occurred over the last ten years.

There are many potential arguments for the trend decrease in selection benefits within equities – the proliferation of passive products, ever lower interest rates, the digital and information and communications technology revolutions - the list goes on. However, this trend may also speak of the relatively benign current macroeconomic backdrop.

Previous spikes in dispersion have often coincided with the emergence of significant write-downs in one particular sector/country or group of sectors/countries, the TMT bubble and great financial crisis being the most recent. In the absence of such cycle-ending distress, we may find that the opportunity set may continue to shrink for some active managers.

This does not have to be the end of days for the active management community - the returns available from selecting the right sectors and markets are still attractive in absolute terms, even if they are smaller than before.

However, it does suggest that when and if we pay for active management, we need to focus even more carefully on managers actually giving us something materially different from the index.

Between asset classes, there are no signs of diminishing selection effects. On the contrary, after several years of increased correlation between commodities and developed markets equities, that correlation now has fallen back into the previous range.

Well-diversified investment portfolios remain both the best defence against that always uncertain future as well as a means of profiting from the likelihood of ongoing economic growth.

Calum Brewster is managing director at Barclays, Wealth & Investment Management, North Region