Active fund managers pitch stock-picking expertise to justify higher management fees. Multi-decade performance data proves that most active managers fail to beat passive benchmarks.
The S&P Dow Jones Indices SPIVA Scorecard tracks fund performance over extended horizons. Over 15-year evaluation periods, more than 85% of active large-cap equity managers underperform benchmark index funds.
Higher expense ratios create an insurmountable structural hurdle for active managers over time. Outperforming a benchmark in one year rarely persists over long investment horizons.
Low-cost index funds capture market returns consistently while avoiding active management drag.
What percentage of your portfolio is in passive index funds versus active funds?
(Not financial advice. For educational purposes only.)
