The Active Management Myth
Data from JustETF and SPIVA scorecards reveals why "beating the market" is a losing game for the vast majority of investors.
The 10-Year Failure Rate
Across almost every major equity market, the vast majority of active fund managers fail to outperform their benchmark index over a 10-year period.
Time is the Enemy
Active managers might get lucky in the short term, but the probability of outperformance collapses as the time horizon extends.
% of Active Funds Underperforming Benchmarks (Europe)
Nowhere to Hide
Even in "inefficient" markets like Emerging Markets, active managers struggle to beat the index consistently.
The Fee Drag Simulator
Active funds typically charge 1% - 2% fees. Passive ETFs often charge less than 0.2%. See how a "small" 1.5% fee difference destroys wealth over 30 years.
Assumes 7% annual market return. The active investor loses 34% of their potential final wealth solely due to a 1.5% fee difference.
The Vanishing Funds
Performance data is often skewed by "Survivorship Bias". Poorly performing funds are quietly closed or merged, deleting their bad records from history.
Luck, Not Skill
The "Persistence Scorecard" shows that top quartile managers rarely stay in the top quartile.
- Top funds in 2019 rarely remained top in 2023.
- Performance flip-flops randomly year to year.
- Consistent outperformance is statistically effectively zero.