Bad News for Active Managers

Only 38% of actively managed mutual funds and exchange-traded funds beat their passive counterparts last year, a drop from 42% in 2024. That’s according to a Morningstar report that’s got to be a real kick in the teeth for active managers. It’s not like they’re getting worse – it’s just that passive funds are getting better.

A Different Approach

CFP says we should think of active and passive funds as ‘teammates, not rivals.’ That’s a nice sentiment, but it won’t change the fact that most active managers can’t beat the market. So, what’s the point of paying them to try? It’s a question investors should be asking themselves, especially when they’re paying higher fees for active management.