Key takeaways
- Over the 20 years to December 2024, 91.99% of active US large-cap funds trailed the S&P 500, and 94.11% of all active US domestic equity funds trailed the S&P Composite 1500 (SPIVA U.S. Year-End 2024).
- The odds are not uniform. Over the 20 years to June 2025, 94.03% of emerging-market funds underperformed, but only 70.45% of international small-cap funds did. In Europe, 10-year underperformance ran from 67.09% (UK small-cap) to 100% (Denmark).
- Only 37.29% of the 2,373 US domestic equity funds that existed in mid-2005 were still alive 20 years later. SPIVA counts the dead ones. Most comparisons you see quoted do not.
- Asset-weighting narrows the gap but does not close it: over 20 years, US large-cap active funds returned 8.77% a year equal-weighted and 9.48% asset-weighted, against 10.73% for the S&P 500.
- Morningstar, measuring against real index funds that charge real fees, found 21% of active funds survived and beat their passive peers over the 10 years to December 2025 — and just 10% among US large-cap.
The answer, before the argument: over 20 years, roughly nine in ten active US funds lost to their benchmark
You're deciding whether to pay someone to pick stocks, or to buy the whole market and stop thinking about it. The best dataset for that decision is the SPIVA Scorecard, published twice a year since 2002 by S&P Dow Jones Indices — the company that owns the S&P 500 — which compares active funds to the index they claim to beat.
Its US scorecard for year-end 2024 reports that 91.99% of active large-cap US equity funds underperformed the S&P 500 over the preceding 20 years. Across all active US domestic equity funds against the broader S&P Composite 1500, the figure was 94.11%.
That much you'd have heard third-hand. What you probably haven't: the number swings hard depending on which market you ask about, SPIVA's counting method is unusually unforgiving, and S&P's separate Persistence Scorecard is more damaging to active management than the headline is.
The odds swing from 70% to 100% depending on where you look
"Active management doesn't work" is a claim about efficient markets: that public information is already in the price, so the effort of finding mispriced stocks doesn't pay for itself. If that were equally true everywhere, underperformance rates would look the same everywhere. They don't.
Take SPIVA's US scorecard for the 20 years to June 2025. Against the S&P 500, 91.03% of large-cap funds underperformed. Against the S&P/IFCI Composite, 94.03% of emerging-market funds underperformed — worse, in the segment most often called inefficient and therefore fertile ground for stock pickers. But international small-cap funds, measured against the S&P Developed Ex-U.S. SmallCap, underperformed at only 70.45%. Same house, same method, same window. A 24-point spread.
Europe stretches it further. SPIVA's Europe scorecard for year-end 2024 reports 10-year underperformance of 67.09% for sterling-denominated UK small-cap equity funds — and 100% for Denmark equity funds, where not one active fund beat the S&P Denmark BMI over the decade. Euro-denominated global equity funds: 97.37%.
The honest version of the efficient-markets claim is narrower than the popular one. In large, liquid, heavily-researched markets the index is brutally hard to beat. In some smaller corners the failure rate drops to two in three — still losing odds, but not the same bet as nine in ten.
Survivorship correction is why SPIVA's numbers look worse than the ones you usually see
Funds die. They get liquidated or merged into other funds, and — as SPIVA puts it — this "usually occurs due to continued poor performance by the fund." If you compare today's surviving funds to the index, you have quietly deleted the losers from the sample.
SPIVA refuses to do this. It fixes the fund universe at the start of the period and uses that as the denominator, because "for someone making an investment decision at the beginning of the period, these funds are part of the opportunity set." A fund that existed in 2005, performed badly and was shut in 2013 counts as a failure — you could have bought it in 2005, and you'd have lived through the closure.
The scale is not a rounding error. Of the 2,373 US domestic equity funds that existed at the start of SPIVA's 20-year window ending June 2025, only 37.29% were still alive at the end. Among large-cap funds, 34.70% of the 758 starters survived. Correcting for that is what makes SPIVA's numbers worse than a fund company's — and more honest.
Morningstar puts a face on it: of the active US large-growth funds that existed two decades ago, nearly 66% closed, and just 1% both survived and outperformed their average indexed peer.
The strongest objection: nobody can buy an index — and it survives testing
Critics of SPIVA have one fair point, and it's worth taking seriously. Fund returns in SPIVA are "net of fees, excluding loads"; the index they are measured against is a costless abstraction that charges nothing and trades nothing. You cannot buy the S&P 500 — only a tracker, which has an expense ratio, a bid-ask spread and some tracking error. The comparison is rigged, the argument runs, by a benchmark that doesn't exist.
Morningstar's Active/Passive Barometer was built to answer exactly this. Instead of an index, it measures each active fund against a composite of the actual passive funds in its category — so the hurdle "reflects the actual, net-of-fees performance of investable passive funds." Its year-end 2025 edition covers 9,248 funds holding roughly USD 26 trillion, about 67% of the US fund market.
Removing the objection barely moves the result. Over the 10 years to December 2025, 21% of active strategies survived and beat their passive counterparts. Among US large-cap funds it was 10%; mid-cap 22%; small-cap 25%. Different shop, different method, a genuinely investable benchmark — same conclusion. The index-fund fee is real, and too small to rescue the average active manager.
Asset-weighted numbers flatter active management, and they deserve to
A second objection: counting funds equally treats a $50 million fund and a $50 billion fund as one vote each, when almost nobody's money is in the first. Weight by assets and you measure what investors experienced.
SPIVA publishes both, and the objection is partly right. Over the 20 years to June 2025, US large-cap active funds returned 8.77% annualised equal-weighted, but 9.48% asset-weighted. Big funds did better. Morningstar sees the same thing: over the past 10 years, the average dollar in active funds beat the average active fund in 17 of 20 categories — investors are, in aggregate, picking the better and cheaper ones.
But the S&P 500 returned 10.73% a year over that same 20 years. Asset-weighting closes about a third of the gap — from 1.96 points a year to 1.25 — and then stops. Compounded over 20 years, that 1.25 points leaves the active investor with about 80% of the index investor’s balance — short by a fifth.
Persistence is the part that settles the question
Underperformance rates tell you the odds of a random fund losing, not whether skill exists. Perhaps a handful of managers are genuinely good and the job is to find them. That argument keeps active management alive, and S&P built a separate document to test it.
The U.S. Persistence Scorecard asks whether winners keep winning. Its year-end 2024 edition reports that among top-quartile domestic equity funds as of December 2020, not a single fund in any reported category was still top-quartile four years later.
Lower the bar to the top half and it barely improves. By pure chance, a top-half fund would stay top-half for five straight years about 6.25% of the time (a coin flip, four times). The actual figure for all large-cap funds was 2.4%; for mid-cap funds 0.8%. Worse than random. Of funds that beat their benchmark in 2022, a cross-category average of just 8.3% kept beating it in each of the next two years.
The same document shows where the dead funds come from: 25% of fourth-quartile US domestic equity funds were merged or liquidated within five years, against 7% of top-quartile funds. Bad performance and disappearance are the same event, separated by a few years.
Note what this does and does not prove. Not that no manager has skill — but that past relative performance is close to useless as a way of identifying that skill in advance, which is the only tool a retail investor has.
Where the case against active management is weakest
Fees are the clearest lever anyone has found. Over the 10 years to December 2025, Morningstar reports, 31% of cheapest-quintile active funds beat their average passive peer, against 17% in the priciest. Cost roughly doubles the strike rate. It still doesn't get you past 50%.
Bonds hold up better than shares: Morningstar's fixed-income cohort posted a 42% 10-year success rate, the highest of any group it tracks, and active intermediate-core bond managers hit 55% in 2025.
And persistence is not uniformly below-random. S&P's Europe Persistence Scorecard for year-end 2023 found the share of funds staying top-half over four consecutive years exceeded chance in 4 of 10 reported categories — though in five of six equity categories, no top-quartile fund from 2019 stayed top-quartile for four years.
What this evidence cannot tell you
SPIVA measures a specific universe: retail mutual funds, in defined style categories, against S&P's own indices. It does not cover hedge funds, separately managed accounts, or most institutional mandates. The 20-year windows ending in 2024 and 2025 contain one long, unusually concentrated US bull market in which a handful of mega-caps drove index returns — a regime unkind to a diversified stock picker almost by construction, and under no obligation to repeat.
Style drift muddies the comparison too: only 47.70% of the domestic funds that survived SPIVA's 20-year window still had the same style classification at the end, so some are judged against a benchmark they long since stopped resembling. And an underperformance rate is a statement about a population, not a forecast about any individual fund. Two decades is evidence about odds, not a law.
Short-run results swing hard, which is worth seeing before treating "90%" as a constant: in the first half of 2025, only 22.33% of US small-cap funds underperformed the S&P SmallCap 600. Over 20 years, 87.81% did. The long horizon is where the pattern lives.
What would change the conclusion
Three things, concretely. First, a sustained stretch in which the index is no longer driven by a narrow group of mega-caps: the concentration punishing diversified stock pickers would ease, and the large-cap numbers would move first. Second, evidence of persistence that beats chance across categories and a full cycle, not one region in one window; the Persistence Scorecards publish twice a year, so the test is public. Third, if the cheapest-quintile success rate — 31% over the last decade — climbed through 50% as fee compression continues, the arithmetic driving all of this would have changed.
None of that has happened yet. What the data supports is a statement about odds, not a rule: over 20 years in US large-cap, the base rate of picking a fund that beat the index and survived was around one in ten, and past performance was close to worthless as a way of improving those odds. Whether that bet is worth taking depends on what you think you know that the record doesn't. The judgement is yours; the base rate is not in dispute.
The number to hold onto is the annualised gap, not the win rate — the same arithmetic that governs rebalancing costs, and the same reason to check what a widely-cited dataset measures before acting on it. LedgerTouch reports cost drag alongside returns, where a 1.25-point annual gap becomes visible.
This content is for informational purposes only and does not constitute financial advice. Always do your own research or consult a qualified financial adviser before making investment decisions.