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.
Ever notice how financial bad news grabs your attention more than good news? There's a reason — it's called negativity bias — and it's costing investors real returns. Here's what the science says.
Robin Powell
Sep 12, 20257 min read
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