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.
Hedge funds are sold on diversification, uncorrelated returns and capital preservation. Goldman Sachs publishes the 50 stocks that turn up most often among their largest long positions, and eight of the ten biggest make chips, memory or the machines that make chips. Most of what a hedge fund does never reaches a regulatory filing. The disclosed long book is the one part investors can inspect, and at the middle of this year it was almost 40 per cent technology.
TEBI
2 hours ago7 min read
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