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.
Leopold Aschenbrenner had better access to AI than almost any investor. His hedge fund grew to $24bn in less than two years. Yet it collapsed not because his AI thesis was wrong, but because leverage forced him to sell. The AI investing risk his story reveals is one most investors overlook.
Robin Powell
1 day ago4 min read
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