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Why active funds underperform even when the manager picks well
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.

Robin Powell
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Active fund fees: how inflated are they?
New research reveals active fund fees are far too high for the value they add. So how much is active management actually worth? Investors routinely pay substantial active fund fees, typically five to ten times more than passive alternatives. It's the equivalent of paying £7 or £8 for a pint of milk—but is this premium actually justified? The academic case against high active fund fees has been building for nearly three decades. Now, groundbreaking research by Andrew Ang and D

TEBI
Jun 30, 20255 min read


Are active funds better in bear markets?
It is often claimed that active funds offer greater protection in falling markets. Unlike index funds, active managers can hold cash or shift into bonds to avoid losses. But the evidence suggests otherwise. According to TIM EDWARDS from S&P Dow Jones Indices, most active funds fail to beat the market in bear phases just as they do in bull runs. If you are worried about downside risk, there may be better, cheaper solutions than relying on active management. 1. Active funds sti

Robin Powell
Apr 14, 20253 min read


Avoid advisers who recommend active funds
Before choosing a financial adviser, it is essential to ask the right questions. One of the most revealing is whether they recommend active or passive funds. Actively managed funds come with higher costs, and over time, those fees eat into returns. As investment author ANDREW HALLAM explains, the odds of outperforming low-cost index funds with active funds are slim. The good news is that more advisers are now turning to low-cost passive funds. If yours does not, it may be tim

Robin Powell
Apr 7, 20253 min read


The "purposeful inertia" that preserves the status quo in asset management
Why does asset management move at a snail's pace? A new book claims it's down to the "purposeful inertia" of entrenched interests.

Robin Powell
Jan 27, 20254 min read


Two warnings for investors choosing active funds
Choosing an active fund can seem like a smart move, especially when a fund has delivered strong results in the past. But past performance...

Robin Powell
Aug 26, 20244 min read


How do active funds perform?
Active funds promise market‑beating returns through clever stock‑picking and timely trades. Yet the evidence shows that very few deliver. ...

Robin Powell
Jul 22, 20242 min read
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