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.
The fifth anniversary of the closure of the Woodford Equity Income Fund (WEIF) is two weeks away. More than 300,000 investors were affected by WEIF’s implosion. Some of them planned to retire by now but are still having to work to recoup the money they lost. Many died without receiving any compensation. You would hope by now the financial industry would have learned the lessons of this sorry saga. Alas I fear it hasn’t, and, five years on, the chance of a recurrence has never
Robin Powell
Jan 5, 20254 min read
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