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.
AI now sits beside roughly a third of British retail investors as they make money decisions. New research from Wharton, MIT and a Nobel laureate puts a number on what it's doing to their judgment: confidence rises by nearly 12 percentage points, even when the AI is wrong half the time. The researchers call it cognitive surrender — and the investors most prone to it are the ones least likely to notice.
Robin Powell
May 288 min read
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