Most active fund managers fail to beat benchmarks, new report finds

Most active fund managers in Australia have underperformed the share market benchmark in 2025 and over the past decade, with new analysis revealing poor outcomes for investors. This trend could accelerate the adoption of lower cost exchange traded funds (ETFs), according to Global X ETFs‘ Chief Executive Officer, Alex Zaika (pictured).

The underperformance of active fund managers is revealed by new research from S&P Dow Jones Indices, the SPIVA Australia Scorecard, that found most actively managed funds underperformed over the decade ending in June 2025 in every asset category, including Australian and global equities.

The SPIVA report found that 94% of global equity managers and 84% of Australian general equities managers performed worse than their benchmark index over 10 years to June 30, 2025.

“Even more striking is that in 2025, in what has been a very strong year for global share markets, most Australian equities managers still did worse than their benchmarks. While the S&P/ASX 200 gained 6.4% in the first half of 2025, actively managed traditional Australian equity funds on average rose just 4.5%, with 71% performing worse than the Australian benchmark index,” said Zaika.

“So while the time might seem just right for active stock pickers to finally beat the market, most are still widely missing the mark.

“This is a long-term trend. Over the 15-year span, 85% of Australian general equities funds failed to beat their benchmark and that was true for 96% of global equities managers. In other words, most global and Australian equities managers perform worse with time, so this is not a short-term phenomenon, but an entrenched theme both here in Australia and in the US,” said Zaika.

With disappointing performance and higher fees across actively managed funds, portfolios constructed entirely from index tracking ETFs are likely to become more common moving ahead, according to Zaika.

“Investors are increasingly demanding that investment managers provide better returns and at lower cost; ETFs offer this while delivering transparency, liquidity and simplicity. ETFs have opened up global markets and paved the way for Australians create more wealth by investing in ETFs that track major offshore indices, or invest in the world’s fastest growing industries such as AI and semiconductors and the likes of Nvidia, Google and Microsoft and other AI leaders,” said Zaika.

“In contrast, while active managers exist to outperform their benchmarks, most can’t do it consistently or over the long term.”

SPIVA has also found that where active managers do outperform in Australia, that outperformance is typically short-lived.  For instance, SPIVA found that 127 out of a total 307 Australian Equity General funds outperformed the S&P/ASX 200 in 2022, but only one of those 127 winners continued to outperform in 2023 and 2024.