The managers running the biggest active funds picked stocks that beat the market in 2025 — and most still lagged their benchmark. A Morningstar do-nothing experiment and a body of academic research explain why active funds underperform even when the picking is good: skilled buying undone by poor selling, the hidden cost of trading, and the incentives that keep managers churning. The UK evidence points the same way.
New research from Harvard Business School reveals that during every stock market bubble, the experts aren't sceptics being drowned out — they're true believers. Analyst forecasts soar, short sellers vanish, and the media barely whispers the word 'bubble'. Worse, the degree of optimism actually predicts crash probability. If nobody warns you before a bubble bursts, what can you do? Build a portfolio that doesn't depend on the alarm working at all.
Robin Powell
Mar 187 min read
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