Do money managers beat the market?

By Investor's Report Card · October 30, 2026

Most don't, especially over the long run. Decades of research comparing professionally managed funds with simple index funds point the same way: after fees, the index usually wins.

What the research shows

79%

of actively managed U.S. large-company stock funds did worse than the S&P 500 in 2025.

83%

did worse than the S&P 500 over the last 10 years.

90%

did worse than the S&P 500 over the last 15 years.

Source: S&P Dow Jones Indices, SPIVA® U.S. Scorecard. 10- and 15-year figures as of June 30, 2026.

Few beat an index fund. Morningstar found that only about 1 in 5 active funds both survived and beat the average index fund in their category over the 10 years through 2025. Many of the rest were closed or merged away.
Winners rarely stay winners. Of the U.S. stock funds in the top quarter of their category in 2021, none stayed in the top quarter through 2025, apart from a few small-company funds (S&P Persistence Scorecard). Last year's star is a poor guide to next year's.
Bonds too. In 2025, on average 70% of active bond funds trailed their benchmarks.
Fees are a big reason. The cheapest active funds succeeded far more often than the most expensive ones (31% versus 17% over 10 years, Morningstar).

Why low-cost index ETFs are hard to beat

An index ETF (exchange-traded fund) simply owns every stock or bond in an index, such as the S&P 500, and trades like a stock. It doesn't try to pick winners, so it doesn't need a team of analysts.

Low cost. The average dollar in an index fund paid about 0.10% a year in 2025, against about 0.58% for actively managed U.S. stock funds (Morningstar). Many broad index ETFs charge 0.03%. An advisor's fee, often around 1% a year, comes on top of the fund's own costs.
Costs compound. On a $500,000 account, a 1% yearly difference is $5,000 in the first year alone, and the money lost to fees can't grow over the years that follow.
Tax efficient. ETFs rarely pass capital gains on to their owners, so less is lost to taxes in a taxable account.
Simple math. Before costs, all investors together earn the market's return. After costs, the average actively managed dollar must trail it.

What matters is the low-cost index approach, not the ETF itself. A low-cost index mutual fund does about as well.

Some widely used index ETFs

These are the funds Investor's Report Card uses to stand in for each market index, plus a few other broad, low-cost index ETFs. They are examples to help you compare, not recommendations to buy.

Ticker	What it tracks
SPY	S&P 500: 500 large U.S. companies (one of our comparison indexes)
DIA	Dow Jones Industrial Average: 30 large U.S. companies (comparison index)
ONEQ	NASDAQ Composite: stocks listed on the NASDAQ (comparison index)
IWM	Russell 2000: small U.S. companies (comparison index)
IWV	Russell 3000: nearly the whole U.S. stock market (comparison index)
URTH	MSCI World: large and mid-size companies in developed countries (comparison index)
AGG	U.S. investment-grade bonds (comparison index)
VOO, IVV	S&P 500, at a lower cost than SPY
VTI	The total U.S. stock market
VXUS	Stocks outside the U.S.
BND	The total U.S. investment-grade bond market

Check each fund's current fees and holdings on its provider's website before investing. See how the comparison funds have done over the last 3 months to 4 years on Index returns.

What about your money manager?

These studies cover mutual funds. Advisors who manage individual accounts don't publish a scorecard, and a monthly statement doesn't tell you whether your account kept up with the market. That's the gap Investor's Report Card fills.

Sources

SPIVA® U.S. Year-End 2025, S&P Dow Jones Indices (March 2026)
SPIVA® data by region and time period, S&P Dow Jones Indices
U.S. Persistence Scorecard, S&P Dow Jones Indices
Better Conditions Did Not Yield Better Results for Active Managers in 2025 (Active/Passive Barometer), Morningstar (February 2026)
2026 U.S. Fund Fee Study, Morningstar (May 2026)

How is your account really doing?

Investor's Report Card turns the numbers on your monthly statements into a report card: your account's real return, after deposits and withdrawals, next to the market indexes you choose, graded A+ to F.

Start your free trial See a sample report

This article is general information, not investment advice. Investor's Report Card is not a registered investment advisor and doesn't recommend any investment. Past performance doesn't guarantee future results.