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.
Buying an ESG fund is widely assumed to change corporate behaviour. New research from Drexel University and the University of Texas at Dallas finds that most ESG funds have little measurable impact — but a committed minority, with a genuine financial incentive to engage, drives real improvements in the companies they hold. The difference lies not in what a fund owns but in how it behaves as an owner.
Robin Powell
Jun 237 min read
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