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.
With the Magnificent Seven dominating the S&P 500, concentration risk is at historic highs. Here's why portfolio diversification remains your best defence.
Robin Powell
Dec 1, 20258 min read
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