2025 gave active fund managers every excuse they could have asked for.
Tariff wars. AI disruption. Interest rate uncertainty. Geopolitical noise. The kind of volatility that's supposed to separate the great stock-pickers from everyone else.
And yet, the data is in. And it tells the same story it has for decades.
According to the SPIVA® 2025 Scorecards published by S&PDow Jones Indices, the most widely cited independent measure of active fundperformance, 74% of Australian general equity managers failed to beat their benchmark over the past year. In Canada, that number was 85.4%. In the U.S., 79% of large-cap managers fell short of the S&P 500.
Those are the one-year numbers. Stretch it out to 15 years, and the picture becomes even clearer: across almost every category and every country measured, the failure rate approaches 90–100%.
This isn't a bad year for active management. This is the pattern.
SPIVA stands for S&P Indices Versus Active. It's an independent, twice-yearly report that compares the performance of actively managed funds against their relevant benchmark index. All with one important safeguard built in: it accounts for funds that have closed or merged over the period, so the results aren't skewed by only showing the survivors.
It's widely regarded as the most reliable source of truth on this question in the industry.
It's not because fund managers are incompetent. Most are highly intelligent, well-resourced, and working hard.
The problem is structural.
When you invest in an actively managed fund, you're paying amanager to try to identify which stocks will outperform the market and to buy and sell accordingly. That sounds logical. But in practice, three things work against you:
1. Cost. Active funds charge more. Those fees comedirectly out of your return, every year, whether the manager beats the benchmark or not.
2. Competition. The people on the other side ofevery trade are also smart, well-resourced fund managers. In a market where everyone has access to the same information, consistent outperformance isextremely difficult to sustain.
3. Time. A manager might get lucky for a year or two. But luck doesn't compound. The longer the time horizon, the harder itbecomes to maintain an edge, and SPIVA's 10 and 15-year data makes this impossible to ignore.
At 5 Financial, our investment philosophy is built on one straightforward idea: rather than trying to beat the market, we position our clients to capture the market's return.
As independent financial advisers serving clients across Sydney CBD and Rhodes, we use low-cost, diversified index funds that trackbroad market benchmarks. No guesswork. No high fees. No reliance on a fund manager having a good year.
This isn't a passive approach to your financial life, quite the opposite. It's a deliberate, evidence-based investment strategy built around what the data consistently shows to be the most reliable path tolong-term wealth management.
If you're currently invested in actively managed funds or you're being told that your adviser has a strategy to "outperform the market", it's worth asking some honest questions:
How has the fund performed relative to its benchmark, net of fees, over 10+ years?
How many funds with that same strategy have closed or changed in that time?
What would a low-cost, index-based alternative have returned over the same period?
These are exactly the kinds of questions our team works through with clients every day. Whether you're approaching retirement, building wealth, or simply wondering if your current investments are working as hard asthey should be. We'd love to have that conversation.
If you're looking for investment advice in Sydney CBD or a financial planner in Rhodes, we're here when you're ready.
When you're clear financially, life feels better.
Data referenced from the SPIVA® 2025 Scorecards, published by S&P Dow Jones Indices. SPIVA is a registered trademark ofS&P Dow Jones Indices LLC.