The Data on Active Large Cap Underperformance

Sometimes, the data is so overwhelming that little commentary is needed.

From SPIVA, here is the data on large-cap fund performance in the United States, showing the percentage of all large-cap funds that over and underperformed the S&P 500 over various time frames:

1 Year:  65.24% of funds underperformed the S&P 500; 34.76% outperformed the S&P 500

3 Years: 84.96% underperformed; 15.04% outperformed

5 Years: 76.26% underperformed; 23.74% outperformed

10 Years: 84.34% underperformed; 15.66% outperformed

15 Years: 89.50% underperformed; 10.50% outperformed

After 15 years, the odds are about 1 in 10 that you have picked an active fund that has outperformed its benchmark over that period. (All data as of Dec 31, 2024) And, if we go out to 20+ years, practically nobody net of fees has beaten their benchmark.

The probabilities make it clear that a broad index should be the core of your portfolio; if you want to put your own spin on it, feel free to try.

Portfolios cannot achieve Alpha if they are not at least getting out with Beta.  

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Do you need help with your assets? We work with clients by constructing a long-term financial plan, marrying it to an appropriate level of risk in a broadly diversified portfolio built around a core index, and then applying the best technology we can find to generate net after-tax returns with modest risk and volatility.

Reach out to us at info@ritholtzwealth.com for more information…

Sources:
More Than 80% of Active Managers in Public Markets Underperform Their Index
Torsten Sløk,
Apollo, May 29, 2025

United States Percentage of All Large-Cap funds vs S&P 500
SPIVA Research

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