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.
Buy the clean companies, avoid the dirty ones, and emissions fall. That is the promise almost every sustainable fund rests on. New calibrations from Samuel Hartzmark of Boston College and Kelly Shue of Yale suggest the version of ESG divestment that leaves a high-emitting industry altogether can push global emissions up, while staying inside the industry and holding the cleanest companies in it brings them down. On a fund factsheet, the two look identical.
Robin Powell
4 hours ago10 min read
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