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.
Active fund managers keep warning about passive investing's dangerous rise. But new research covering $784 billion in institutional assets reveals active management still dominates — capturing 97% of all fees paid.
Robin Powell
Jan 216 min read
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