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.
When a false claim is corrected, we assume its influence disappears. New experimental evidence suggests that is true for numbers but not for stories: a debunked statistic leaves almost no trace, while a debunked story keeps shaping beliefs — and leaves people more confident, not less. This is what the finding means for the market narratives investors absorb every day, and why the beliefs held most firmly may deserve the most scrutiny.
TEBI
3 days ago7 min read
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