Do Active Funds Beat the Market? What the 2025 SPIVA Scorecards Show

The question every investor should ask

When you buy an actively managed fund, you pay a professional to choose investments that will do better than the market. When you buy an index fund or ETF, you accept the market’s return, minus a small fee. Paying more only makes sense if the professionals deliver. S&P Dow Jones Indices has measured exactly that for more than two decades in its SPIVA scorecards (S&P Indices Versus Active), which compare actively managed funds with the benchmark index for their category, and count the funds that close along the way.

Europe: 2025 was a bad year, and ten years is worse

The SPIVA Europe scorecard for year-end 2025 covers funds sold in Europe, measured in euros and in pounds. In 2025 alone, 82% of active Europe equity funds in euros lagged their benchmark, as did 71% of global equity funds. In the UK, equity funds had one of their worst years in the 14 years of data: 88% of broad UK equity funds and 97% of UK small-cap funds underperformed.

Longer periods are more telling, because anyone can have a lucky year. Over the ten years to the end of 2025, the share of active funds that lagged their benchmark, measured in euros, was:

• Europe equity: 97.0%
• Global equity: 98.4%
• US equity: 98.2%
• Eurozone equity: 97.9%
• Emerging markets equity: 90.9%

Measured in pounds the results were similar: 97% of global equity funds and 93% of UK equity funds lagged over ten years. Emerging markets did a little better, as they often do; in 2025 itself, fewer than half of emerging market funds sold in euros trailed their benchmark. Even there, nine in ten lagged over a decade.

Many funds do not even survive

The scorecards also count the funds that disappear. Funds that do badly are often merged into others or closed, which quietly removes their records from the figures fund companies advertise. Over the ten years to 2025, only 57% of Europe equity funds and 62% of global equity funds sold in euros survived; among UK equity funds sold in pounds, 46% did. If you pick an active fund today, there is a real chance it will not exist in ten years, let alone beat its index.

The US tells the same story

In the SPIVA US scorecard for year-end 2025, 79% of large-cap funds lagged the S&P 500 in 2025. Over 15 years the figure was 90%, and over 20 years 93%. Across all US equity funds investing at home, 95% trailed their benchmark over 20 years.

Most professional fund managers are skilled. The problem is that they compete with each other, and the fees come out of your return either way.

Why the professionals lose

It is not that fund managers are bad at their jobs. Market prices are set largely by professionals trading against each other, so as a group they cannot beat the market before costs, and after costs they must lag it on average. Costs decide the outcome. According to Morningstar’s European Fund Fee Study 2025, the average actively managed equity fund in Europe charged an ongoing fee of 1.17% a year at mid-2025, against 0.19% for passive equity funds, weighted by assets. ESMA, the EU’s markets regulator, found that once entry and exit charges are included, non-ETF equity funds cost investors about 2.1% a year in 2019–2023, against about 0.6% for equity ETFs.

One percentage point sounds small. Take a hypothetical €10,000 growing at 6% a year before costs for 30 years: in a fund charging 0.2% it becomes about €54,300; in one charging 1.2% it becomes about €40,800. The difference, roughly €13,500, is paid away in fees, with no guarantee of anything in return.

So is active management always wrong?

No. Some managers do beat the market over long periods, and areas such as smaller companies or less-researched markets give skilled managers more room. The difficulty is identifying them in advance: SPIVA’s separate persistence scorecards show that funds at the top in one period rarely stay there in the next. Our profiles of investors such as Francisco García Paramés and Terry Smith show both sides — long winning records, and long stretches behind the market.

What it means for your savings

For most people, a low-cost, broadly diversified index fund or ETF is a sensible core for a long-term portfolio: you get the market’s return minus a small fee, and you avoid the risk of choosing the wrong manager. If you do choose an active fund, check its total costs, compare its record with a low-cost index alternative over at least ten years, and ask what exactly you are paying for. This guide is general education, not personal financial advice.

This article is educational and general in nature. It isn’t personalized investment, tax, or legal advice — always weigh your own circumstances, or talk to a licensed professional, before making financial decisions.

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