CNBC - "Active managers struggled to beat index funds amid volatility from elections, tariffs, Morningstar finds"

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ClubMan

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Active managers struggled ‘mightily’ to beat index funds amid volatility from elections, tariffs, Morningstar finds​

Key Points
  • The ability to outperform during volatile periods is an oft-touted benefit of actively managed mutual funds and ETFs.
  • However, just 33% beat their average index fund counterpart from July 2024 through June 2025, Morningstar found.
  • This was a period when elections, executive orders, tariffs and geopolitical risks provided ample volatility, an analyst said.
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Brendan Burgess said:
What is amazing is that so many people are passively investing, yet the active managers can't outperform them.
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There needs to be someone out there doing active investment, otherwise we'll end up buying Nvidia, Tesla, meta, alphabet et al until the heat death of the universe.

Some of them are outperforming some of the time, and that's enough to keep the passive world turning.
 
Brendan Burgess said:
What is amazing is that so many people are passively investing, yet the active managers can't outperform them.
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Well some do...look at the returns of the some of multistrat managers...but in aggregate all the active managers HAVE to underperform because the fees they charge guarantee its so....but if your in for example Citadel's Wellington fund the fees look like a great deal in the last five years as you've outperformed SPY net of fees by a full ~90 percentage points.
 
ClubMan said:
Approximately 1 in 3 according to the article
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1 in 3 in there period in question. Maybe it'll be 1 in 3 again on the next period, but it won't be the same 1 in 3.

Active investing will beat passive all the time, but it'll be different funds every week/month/year/decade. That's enough to benefit the market by having winners rising to the top of their respective stock markets/indices, but it isn't enough for a person to be able to consistently beat the market by investing in an active fund. They'd have to somehow pick the winners that pick the winners, and at the right times.
 
Fortune said:
They'd have to somehow pick the winners that pick the winners, and at the right times.
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Yes outperformance persistence is the great filter.......that shrinks the outperformance universe across 5yr, 10 & 15yr periods to maybe a handful of names...your down to easily sub-1% of funds out there.......short version....buy the index most of the time.....but not at 23x times future earnings
 
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