Active funds “struggled mightily” to beat their index fund counterparts over the past year, according to a recent Morningstar report.
That happened even amid market gyrations tied to tariffs and geopolitics — the kind of volatile periods during which active managers typically claim to outperform, said Bryan Armour, director of ETF and passive strategies research for North America at Morningstar.
Just 33% of actively managed mutual funds and exchange-traded funds had higher asset-weighted returns than their average index counterparts from July 2024 through June 2025, after accounting for investment fees, according to a Morningstar report published in August.
That’s a drop of 14 percentage points from the prior year, it found.
Money managers who use active management pick stocks, bonds and other financial assets that they think will beat the broad market.
