Active vs. Passive Fund Performance: What SPIVA Shows

Citation

S&P Dow Jones Indices, SPIVA U.S. Scorecard (published semi-annually). spglobal.com/spdji/spiva

Study Overview

SPIVA (S&P Indices Versus Active) compares the returns of actively managed mutual funds to their relevant S&P benchmark index, correcting for survivorship bias by including funds that closed or merged during the measurement period. It's one of the longest-running, most widely cited studies on active management, covering U.S., Canadian, and international fund markets across multiple fund categories.

Methodology Summary

S&P Dow Jones Indices pulls fund return data across major categories (e.g., large-cap, mid-cap, small-cap U.S. equity funds) and compares each fund's return, net of fees, against its designated benchmark index over 1-, 3-, 5-, 10-, and 20-year periods. Funds that were liquidated or merged during the period are still counted as underperformers if applicable, which avoids overstating active managers' success by only looking at surviving funds.

Key Findings

• In the SPIVA U.S. Scorecard for 2025, 79% of active large-cap U.S. equity funds underperformed the S&P 500 — worse than 2024's 65% and the fourth-worst year in the scorecard's 25-year history.
• Over the trailing 20-year period, about 92% of active domestic equity funds underperformed their benchmark, according to S&P Dow Jones Indices.
• Underperformance rates vary meaningfully by year and category — some years and some fund categories see active managers do relatively better, particularly when market leadership is more dispersed across many stocks rather than concentrated in a few large names.

Limitations

• SPIVA reports historical performance. It says nothing about how any specific fund or manager will perform going forward.
• Results are asset-class and time-period specific — underperformance rates differ between U.S. large-cap, small-cap, international, and fixed-income categories, and between calendar years.
• "Underperforming the benchmark" doesn't mean a fund lost money — a fund can still be profitable while trailing its index.
• SPIVA measures net-of-fee returns against a passive index; it does not evaluate risk-adjusted returns, tax efficiency, or a fund's fit for an individual investor's goals.

Practical Meaning

The consistent, long-run pattern in SPIVA data is a big part of why low-cost, broad-market index ETFs are a common starting point for long-term investors: over long horizons, most active managers have not reliably beaten simple benchmark indexing after fees. That doesn't mean active management never works, but it does mean the burden of proof for choosing an active fund over an index fund is higher than it might intuitively seem.