What percentage of fund managers beat the index? The 15-year number is brutal.

That's the number. Here's what it does and doesn't mean.

The data

SPIVA — S&P Indices Versus Active — has tracked this since 2002 and is the standard reference because S&P runs the benchmarks and has no fund to sell you.

Horizon	Active large-cap US funds that underperformed the S&P 500
2025 (one year)	79%
2024 (one year)	65%
15 years	89.5%
20 years	~92%

The pattern is the important part: the longer the window, the worse active management looks. That's the opposite of what you'd expect if skill were driving results, because skill compounds and luck cancels out. When failure rates rise with time, you're watching costs compound instead.

Why professionals lose a bet they're paid to win

Three mechanical reasons, none of which require anyone to be bad at their job.

Fees are certain; alpha isn't. An active fund charging 0.6% starts every year 0.6 points behind an index fund charging 0.03%. Do that for 15 years and the manager needs to be persistently right just to draw level.

The index isn't an average, it's a competitor. People assume half of active managers should beat the market by definition. They shouldn't. The index has no fees, no cash drag, no trading costs, and never has to sell to meet a redemption. It's a competitor that plays for free.

Returns are driven by a few extreme winners. Broad market returns tend to be concentrated in a small number of enormous winners. Miss those few names and you lag, no matter how sound the rest of your portfolio is. A concentrated active manager is far more likely to miss them than an index that owns everything by construction.

The part that should actually worry a retail investor

Look at the comparison honestly. The 89.5% failure rate belongs to people who do this full-time, with research staff, direct management access, and expensive data.

You have a phone, evenings, and a feed optimized for engagement.

This is not an argument that you can't own individual stocks. It's an argument about how much of your money should depend on being in the winning tenth — and about being clear-eyed that picking stocks is a hobby with a negative expected value for most people, which is a completely fine thing to do as long as you know that's what you're doing.

Where SPIVA gets criticised — fairly

Honest treatment requires the counterarguments, and there are real ones.

Survivorship adjustments, benchmark selection, and the treatment of closed funds all affect the numbers, and some researchers have challenged aspects of SPIVA's methodology. Equal-weighting every fund rather than weighting by assets also arguably understates how investors actually experience active management.

But the criticisms move the number by a few points; they don't move it from 89.5% to 45%. Across markets, methodologies, and decades, the direction is consistent enough that the practical conclusion is unchanged.

What to actually do

If you want market returns: one broad, low-cost index fund is a complete portfolio, and there's no level of sophistication at which that stops being true. See index funds vs individual stocks.

If you want to pick stocks: size it as the hobby it is. An index core plus a satellite you can afford to be wrong about. Write a one-sentence thesis for every holding so you can tell a broken investment from an uncomfortable one.

If you're choosing an active fund: the 1-in-10 odds are on the whole population over 15 years. Past performance is a famously weak predictor — S&P's companion Persistence Scorecard exists specifically to show how rarely top-quartile funds stay top-quartile.

Before any of it: find out whether you'd actually hold through the periods that make active managers underperform. Most people who abandon a strategy do it during exactly the stretch that would have paid. You can test that in a Time Machine scenario rather than with your savings.

FAQ

What percentage of active fund managers beat the S&P 500?

Over the 15 years through 2025, about 10.5% of actively managed large-cap US equity funds beat the S&P 500 — meaning 89.5% underperformed, per S&P Dow Jones Indices' SPIVA Scorecard. Over 20 years roughly 92% underperformed. In 2025 alone, 79% lost to the index.

Why do most fund managers underperform the index?

Three structural reasons: fees are a certain drag while outperformance is uncertain; the index is a zero-fee competitor with no cash drag or forced selling; and market returns are concentrated in a few extreme winners that a selective portfolio is likely to miss. None of this requires managers to be unskilled.

Does active management ever beat passive?

Yes, in individual years and in some market segments — and roughly 10% of large-cap funds did beat the index over 15 years. The difficulty is identifying those funds in advance, which S&P's Persistence Scorecard shows is very hard, because top performers rarely stay top performers.

Should I just buy an index fund?

For most people seeking market returns, a single broad low-cost index fund is a complete and defensible portfolio. Picking individual stocks is reasonable as a deliberately sized minority of your money, provided you understand the base rates and can articulate a thesis for each holding.

Is the SPIVA scorecard reliable?

It's the most widely used reference and is published by S&P Dow Jones Indices, which does not sell funds. Its methodology has been challenged on survivorship handling and benchmark selection, and those critiques are worth reading — but they shift the figures by a few percentage points, not enough to change the conclusion.

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Nine in ten professionals lose this bet over 15 years. That's not a reason to avoid investing — it's a reason to be deliberate about which part of your money is riding on being the exception. See how your own decisions grade, free →