economy
February 25, 2026
Fewer active managers beat index funds last year. Think of them as portfolio 'teammates,' not 'rivals,' CFP says
Among actively managed mutual funds and exchange-traded funds, 38% beat their passive counterparts, down from 42% in 2024, according to a Morningstar report.
TL;DR
- 38% of actively managed funds outperformed passive peers in 2025, down from 42% in 2024.
- Diversified emerging-market funds saw a significant increase in active fund outperformance, while real estate funds saw a decrease.
- Active bond funds also saw a decline in outperformance but maintain a strong 10-year success rate.
- Financial advisors recommend using passive funds for core portfolio exposure and active funds for areas where specialized management may improve risk-adjusted returns.
- Lower fees are crucial for long-term investment growth, with passive funds generally having lower expense ratios.
- The effectiveness of active management may increase as investors approach retirement and face changing risk profiles.
- Skilled active managers can potentially add alpha in less efficient market segments.
Continue reading the original article