By Mari Hansen 
Repetition causes a specific type of embarrassment. It’s unlucky to lose once. It’s a pattern to lose twice. Losing to a fund that doesn’t even try to win for fifteen years in a row is more akin to an institutional identity crisis. Nevertheless, in early 2026, we are once more examining an SPIVA scorecard that presents the same narrative as it has since the majority of today’s junior analysts were still in college.
The 2025 report’s figures are not nuanced. By year’s end, almost 70% of global equity fund managers had fallen short of their benchmark. The S&P/ASX 200 increased by 10.3%, while Australian equity general funds saw an asset-weighted return of 7.5%. Eighty-seven percent of those funds did not outperform the index over a fifteen-year period.
| Category | Details |
|---|---|
| Subject | S&P 500 Index Funds (Passive Investment Strategy) |
| Primary Benchmark | S&P 500 Index |
| Tracked Since | 1976 (Vanguard’s first index fund launch) |
| 2025 SPIVA Report | Released January 2026 by S&P Dow Jones Indices |
| Active Manager Underperformance (10-yr) | 89% of US large-cap active managers |
| Active Manager Underperformance (15-yr) | 91% of US large-cap active managers |
| 2025 Active Equity ETF Outperformance Rate | Only 32% beat benchmark |
| 2025 Active Fixed Income Outperformance Rate | 47% beat benchmark |
| Average Fee Disadvantage (Active vs. Index) | ~0.90% annually (Australia data, broadly similar in US) |
| Key Advocate | Warren Buffett — “The best way to own common stocks is through an index fund” (1996) |
| Reference Website | S&P SPIVA Scorecard |
The situation in the US is nearly identical: 91% of large-cap active managers failed over a fifteen-year period, and 89% of them failed to outperform the S&P 500 over the previous ten years. These are not rounding mistakes. Careers, fees, and investor savings are all vanishing into an unfillable void.
It’s difficult to ignore the almost ritualistic nature of how this occurs each January. The reports are released. The numbers come in. It is covered by financial media for about 48 hours. Then the business moves on, and somewhere in Canary Wharf or midtown Manhattan, another fund manager is discreetly putting together a pitch deck outlining why their team, process, and proprietary signals will be different this time. In contrast, the index fund does nothing. All it does is follow the market. It is practically free. And it prevails.
2025 is especially illuminating because it was a difficult year to be passive. Shifting expectations for monetary policy, geopolitical tension, and a changing macroenvironment that truly rewarded those keeping an eye on credit spreads and duration risk all contributed to the volatility of the equity markets. Every narrative justification was at the disposal of active managers.
Even so, only 32% of managers of active equity ETFs were able to beat their benchmarks. For US large-blend equity managers, the average excess return came in at a negative 2.02%. That is by no means an underperformance. For the retirement accounts of actual people, that is a significant underperformance.
Fixed income is one area where active management demonstrated something truly worth talking about. In contrast to equity, nearly half of active bond managers (47%) outperformed their benchmarks in 2025. 65% of active managers performed better in the intermediate core-plus category, producing an average excess return of positive 0.13%.
ETFs for active bonds outperformed benchmarks by 60%. It’s not noise. Bond markets differ structurally from large-cap stocks in that they are less liquid in some areas, more sensitive to credit analysis, and more responsive to central bank decisions. It appears that active managers can sometimes take advantage of this complexity in ways that just don’t apply to large-cap stocks.
However, the majority of investors keep their money in stocks. The biggest decisions, the largest fees, and the most excruciatingly large discrepancy between promise and delivery take place there. When John Bogle introduced the S&P 500 index fund at Vanguard in 1976, it was first written off as “Bogle’s folly.” However, the fund has spent almost fifty years disproving its detractors.
Many people don’t fully understand how costs compound over time until they look back at statements made over a 20-year period. Compared to their active counterparts, Australian index investors have an annual fee advantage of about 0.90%. In a single year, that might not seem like much. It can mean the difference between a comfortable retirement and five more years of employment over a twenty-year period.
This was recognized by Warren Buffett as early as 1996, when he stated that index funds are the best way to own common stocks. Later, he put it into practice by telling his estate’s trustee to invest 90% of his wife’s inheritance in an inexpensive S&P 500 index fund. From a man who made billions picking stocks, that is not a philosophical stance.
It’s a realistic recognition that what works for experts in controlled environments with teams of analysts and decades of pattern recognition doesn’t readily translate to the real-world circumstances of the majority of investors.
The larger flows present the same narrative in a different way. In 2025, active mutual funds lost $640 billion, marking their ninth outflow year in the previous ten years. In the meantime, $580 billion was earned by active ETFs, mostly from fixed income. Investors are not completely giving up on active management.
They are moving toward less expensive wrappers and categories where the evidence for alpha is at least tenable as they become more picky about where and how they use it. This could be a sign of true sophistication. It might also be more indicative of marketing than of insight.
Uncomfortably, it is still evident that the index fund’s fifteen-year run is not going to end anytime soon. The markets will fluctuate. Managers who are active will have their moments. However, the calendar does not eliminate the structural drawbacks of increased fees, behavioral drift, and the sheer challenge of reliably identifying mispriced securities in liquid markets. The index fund lacks intelligence. It’s not attempting to be. And in some way, that remains the point.