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.
New research covering 100 years of US stock market data shows that just 46 firms out of nearly 30,000 drove half of all shareholder wealth creation — down from 89 in the original study. With wealth increasingly concentrated in fewer winners, the case for indexing has never been stronger. Here's what the numbers mean for your portfolio.
Robin Powell
Mar 208 min read
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