Every year, S&P Global publishes a report that most fund managers would rather you didn’t read. It’s called the SPIVA Scorecard, and it measures exactly how many actively managed funds beat their benchmark index. The results are, once again, damning.
The Australia Year-End 2025 Scorecard shows that a firm majority of active funds underperformed their benchmarks over the decade to December 2025. In every single equity category, over ten years, the majority of active managers fell short.
Morningstar’s Active/Passive Barometer backs this up. In 2025, only 38% of active strategies survived and beat their passive equivalents. Over ten years, just one in five active managers outperformed. The other four either underperformed or closed entirely.
Let’s be clear about what “active management” means. It means paying a fund manager – a highly qualified professional with a team of analysts, expensive data feeds, and decades of experience – to pick stocks and time markets on your behalf. For this service, you pay higher fees. And the evidence, measured across tens of thousands of funds over decades, is that the vast majority of them would have been better off just buying the index.
Why does this happen? It’s not that fund managers are stupid. They’re smart, well-resourced professionals. The problem is that they’re all competing against each other. In a market where thousands of smart people are all trying to find the same mispriced stocks, the opportunities for consistent outperformance are razor-thin. And the fees they charge to try eat into whatever edge they might find.
This is exactly why we use Dimensional and Vanguard at our (like company size, value, and profitability), that have been shown to deliver higher expected returns over time. It’s evidence-based, not gut-feel-based.
Vanguard takes a similar approach: broad diversification, systematic exposure, and relentlessly low costs. Their Balanced Index Fund returned 9.37% for the year to July 2025. No stock picking required.
Here’s the uncomfortable truth for the active management industry: the data has been consistent for over 20 years. SPIVA has been publishing these scorecards since 2002. The results haven’t changed. The majority of active managers underperform, and the ones who outperform in one period rarely do so consistently in the next.
You don’t need to beat the market to retire well. You need to capture the market’s returns, keep your costs low, stay diversified, and stick to the plan. That’s what the evidence says. And that’s what we do.
