Active vs. Passive Investing: What the Data Says (SPIVA 2026)
Active investing means paying a fund manager to pick investments and try to beat the market. Passive investing means buying an index fund that simply owns the market and accepts its return, at a much lower cost. The scoreboard on this question is kept by S&P Dow Jones Indices in its SPIVA reports, and the latest one is clear: over the 15 years to June 30, 2026, 90.5% of U.S. large-cap funds trailed the S&P 500. Here is that data by fund category, why the gap exists, and the few cases where active management can still make sense.
The Short Answer
- Most active funds lose to their index, and more of them lose the longer you look. 83.3% of large-cap funds trailed the S&P 500 over 10 years and 90.5% over 15 years (SPIVA, data to June 30, 2026).
- It holds in almost every category. Over 15 years, 87.7% of mid-cap, 91.1% of small-cap and 90.2% of international funds trailed their benchmarks.
- Cost is the main reason. An index fund can charge a few hundredths of a percent a year; active funds charge more and trade more, and that comes out of your return every year.
- Some active funds do win, but picking them in advance is the hard part, and past winners often stop winning.
- For most people, a low-cost index fund is the default. Active management has a stronger case in a few corners, such as some bond categories over short periods.
What the SPIVA Scorecard Shows
| Fund category | Compared with | 1 yr | 3 yrs | 5 yrs | 10 yrs | 15 yrs |
|---|---|---|---|---|---|---|
| All Large-Cap | S&P 500 | 78.69% | 76.63% | 89.32% | 83.33% | 90.49% |
| Large-Cap Growth | S&P 500 Growth | 91.84% | 95.44% | 95.48% | 93.02% | 100.00% |
| Large-Cap Value | S&P 500 Value | 45.80% | 41.09% | 77.69% | 82.29% | 92.19% |
| All Mid-Cap | S&P MidCap 400 | 76.21% | 72.26% | 76.95% | 78.38% | 87.72% |
| All Small-Cap | S&P SmallCap 600 | 68.50% | 54.76% | 55.58% | 71.08% | 91.12% |
| All Domestic | S&P Composite 1500 | 60.82% | 79.31% | 91.40% | 88.19% | 93.25% |
| International Funds | S&P World Ex-U.S. | 61.58% | 69.85% | 78.65% | 87.10% | 90.19% |
| Emerging Markets Funds | S&P Emerging Plus | 43.06% | 63.43% | 71.36% | 84.90% | 84.97% |
| Investment-Grade Short & Intermediate bonds | iBoxx USD Overall 1-5Y | 17.82% | 24.84% | 29.11% | 48.75% | 67.18% |
| General Investment-Grade bonds | iBoxx USD Liquid Investment Grade | 52.50% | 55.70% | 52.81% | 75.27% | 94.17% |
Three patterns stand out. First, the share of losers rises with time: in any one year a fair number of managers beat the index, but few keep doing it. Second, large-cap growth funds had the worst record, with every single fund in the category trailing the S&P 500 Growth index over 15 years. Third, value and small-cap managers did better over short periods (only 41% of large-cap value funds trailed over three years), but the advantage faded over 10 and 15 years.
SPIVA also includes funds that closed or merged during the period, not just the survivors. Fund companies tend to shut their weakest funds, so studies that only look at surviving funds make active management look better than it was.
Why Most Active Funds Fall Behind
- Fees. The index's return is free; a fund's return is after its expense ratio. A manager charging 0.75% has to beat the market by 0.75% every year just to tie an index fund.
- Trading costs and cash. Active funds buy and sell more, and they hold some cash for redemptions, which drags in rising markets.
- Arithmetic. Before costs, all investors together earn the market return, so the average active dollar earns the market return too. After costs, the average active dollar has to earn less.
- Taxes. More trading in a taxable account usually means more capital gains distributions each year.
How Much Fees Cost Over Time
| Annual fee | $100,000 after 30 years | Lost to fees vs. 0.03% |
|---|---|---|
| 0.03% (a low-cost index fund) | $754,849 | Baseline |
| 0.50% | $661,437 | $93,412 |
| 0.75% | $616,408 | $138,441 |
| 1.00% | $574,349 | $180,500 |
The gap compounds: a 0.72-point difference in cost becomes a difference of about $138,000 on a $100,000 investment over 30 years at these assumptions. That is why the fund's expense ratio, listed in its prospectus, is the first number to check. Run your own numbers with the compound interest calculator.
When Active Can Make Sense
- Some bond categories. In the latest SPIVA report, only 18% to 29% of short and intermediate investment-grade bond funds trailed their index over one, three and five years, and fewer than half over 10 years, though 67% trailed over 15 years.
- Things an index cannot do for you, such as tax-loss harvesting in a taxable account or a portfolio built around your values. These are often done more cheaply with index funds plus a rule or a robo-advisor.
- A small "satellite" around an index core, if you enjoy picking and accept that it will probably lag. Keep it to money you can afford to see underperform.
If you do choose an active fund, look for a low expense ratio, a manager with a long record, low turnover, and a clear reason it should beat its benchmark after fees. A record of beating the index in the past few years, on its own, has not been a reliable guide.
How to Invest Passively
- Pick a broad index. A total U.S. market or S&P 500 fund covers most of the U.S. market; add a total international fund and a bond fund for diversification. See S&P 500 index funds.
- Choose the wrapper. Index mutual funds and ETFs do the same job; ETF vs. index fund explains the differences in minimums, trading and taxes.
- Keep costs low and automate monthly contributions.
- Set an allocation and rebalance once a year or when it drifts; see asset allocation. A target-date fund does all of this in one fund.
If you want to follow your holdings or research individual companies anyway, see our reviews of portfolio trackers and stock analysis tools.
FAQ
What percentage of active funds beat the S&P 500?
Over the 15 years to June 30, 2026, 9.5% of U.S. large-cap funds beat it and 90.5% trailed, according to S&P Dow Jones Indices' SPIVA U.S. scorecard. Over 10 years, 16.7% beat it.
Is passive investing better than active?
For most investors, yes, measured by results after fees: in nearly every U.S. stock category, most active funds trailed their index over 10 and 15 years. Passive investing does not protect you from market falls; it just gives you the market's return at low cost.
Do active funds do better in a falling market?
They can hold more cash or defensive stocks, but the long-run SPIVA figures include several bear markets (2020 and 2022 among them), and most active funds still trailed over those periods.
What is a good expense ratio for an index fund?
Large U.S. stock index funds commonly charge well under 0.10% a year, and some charge 0.03% or less. Check the fund's prospectus or fact sheet.
Are ETFs passive?
Most are, but not all. Many ETFs track an index; a growing number are actively managed. The fund's name and prospectus say which.
Sources
- S&P Dow Jones Indices, SPIVA U.S. results, data as of June 30, 2026 (read October 23, 2026). All underperformance percentages on this page.
- SEC Investor.gov, Mutual Funds
This article is for general information and is not investment advice. The fee table is a hypothetical illustration; actual returns vary and past results of any fund or index do not predict future results. SPIVA figures checked on 2026-10-23.
