Do Active Funds Beat the Index? 2026 Scorecard Guide

“Very few active funds beat the index” is a popular statement, and the number attached to it changes depending on how it is measured. What the published scorecards show is more useful anyway: a range of results that depends on the category, the time period, the cost and the method. This post lays out three sources, what each measures, and how to use the pattern to choose funds with better odds.

Active funds: Source One: Morningstar’s Active/Passive Barometer

Morningstar’s report with data as of December 31, 2025 covers about 9,248 funds with roughly $26 trillion in assets, about 67% of the U.S. fund market. Its “success rate” is the share of active funds that survived the period and beat their asset-weighted passive composite. In 2025, 38% of active funds succeeded, down four points from 2024, and over ten years the success rate across all categories was 21%, roughly flat versus 2024 (Morningstar).

Category	2025	10-year
Large blend	32.1%	8.1%
Large value	60.3%	20.3%
Large growth	17.2%	3.6%
Intermediate core bond	54.7%	41.7%
Small growth	38.7%	37.0%

The pattern is striking: success rates vary widely by category. Morningstar says bond and real estate funds had the highest ten-year success rates and U.S. large-cap funds the lowest (Morningstar). Over ten years, the average dollar invested in active funds beat the average active fund in 17 of 20 categories, which suggests investors tended to favor better-performing funds (Morningstar).

Cost Makes a Measurable Difference

Morningstar reports that over ten years, 31% of the cheapest quintile of active funds beat their passive peers versus 17% of the most expensive quintile, about 1.8 times as many. In U.S. large blend, 17.1% of the lowest-cost funds succeeded over ten years versus 5.3% of the highest-cost funds, about 3.2 times as many (Morningstar). Of the categories in the report, cost mattered in nearly all of them, and in several the cheapest funds had a success rate more than double the most expensive.

Source Two: SPIVA

S&P Dow Jones Indices’ SPIVA U.S. year-end 2025 scorecard found that 79% of active large-cap funds underperformed the S&P 500 in 2025, up from 65% in 2024. It calls that the fourth-worst year for active large-cap managers in the scorecard’s 25-year history, and attributes it to unrelenting large-cap outperformance: the S&P 500 rose 18% and set 39 record closing highs.

In mid-cap, 55% of funds underperformed, and in small-cap, 41% (S&P Dow Jones Indices). The scorecard shows meaningful differences across categories as well: emerging markets debt was the only fixed-income category in which a majority of funds outperformed (S&P Dow Jones Indices).

Source Three: A Study That Re-Ran the Scorecard

Wealth Management (May 12, 2026) reports a study written by K. J. Martijn Cremers, Jon Fulkerson and Timothy Riley and sponsored by the Investment Adviser Association’s Active Managers Council. It re-ran SPIVA’s calculations with three changes: judging closed funds on their performance before closing, weighting by fund assets, and comparing active funds with passive mutual funds rather than hypothetical indexes (Wealth Management).

For U.S. equity funds over 20 years, the failure rate fell from about 92% of funds to about 55% of assets.
In fixed income over 10 years, it fell from 71% of funds to 37%.
The authors concluded the chance of outperforming for a dollar invested in U.S. equities was close to a coin flip (Wealth Management).

S&P Dow Jones Indices responded that SPIVA measures the proportion of funds, not assets, to keep the analysis independent of fund size, and that comparing funds with broad, investable benchmarks is the standard approach. An outside analyst noted the study ignores taxes and that early-year results may drive a long-run asset-weighted figure (Wealth Management). Because the two measure different things, the drop from 92% to 55% is not a like-for-like comparison.

Why the Numbers Differ

Counting funds versus dollars. SPIVA counts funds; the re-run weighted by assets.
Closed funds. SPIVA counts a fund that closes as an underperformer; the re-run judged it on the period it existed.
The yardstick. Hypothetical indexes versus passive funds you can actually buy.
The period and the category. One year and ten years give very different answers, as do large blend and bond categories.

What a Cost Gap Is Worth in Dollars Over 20 Years

Morningstar’s cost-quintile result tells you cheaper funds had better odds. The SEC bulletin on fees puts a dollar figure on the same idea: a $100,000 investment growing at 4% a year for 20 years ends at about $208,000 with a 0.25% annual fee, about $198,000 with 0.50% and about $179,000 with 1.00% (SEC investor bulletin on fees and expenses). The bulletin gives approximate figures and does not state a no-fee baseline.

Taking the fee as a share of the balance each year, my own calculation gives $100,000 × (1.04 × 0.9975)^20 = $208,413 at 0.25%, $198,211 at 0.50% and $179,213 at 1.00%, matching the bulletin’s rounded numbers. The gap between the cheapest and the most expensive is $208,413 − $179,213 = $29,200. With no fee at all, the same 4% would end at $219,112, so even the 0.25% fee costs $10,699 over the period. These are fee-only illustrations at an assumed constant return.

How to use it: the 0.75-point difference between 0.25% and 1.00% is worth about $29,200 on $100,000 in this model, which is the amount an active fund must beat the index by, after costs, just to break even with the cheaper option. Before picking an active fund, look up its expense ratio and compare it with an index fund in the same category, then ask whether you expect its extra return to cover the difference. Morningstar’s data shows that in the cheapest quintile 31% of active funds beat their passive peers over ten years, so starting from the lowest-cost active options improves the odds.

How to Use This

Start with cost. The cheapest quintile outperformed the most expensive in Morningstar’s data, so expense ratio is a good first filter.
Look at the category. Morningstar’s ten-year rates run from 3.6% in large growth to 41.7% in intermediate core bond.
Match the time frame to your own. Longer periods were less favorable to active funds in Morningstar’s data, so ten-year results are a better guide for a long-term investor than one-year results.
Know what is being measured when you see a percentage: funds or dollars, and which benchmark.

My Take on Active vs Index Funds

In my view, the same word, “beat,” means different things depending on whether a study counts funds or dollars and what it does with closed funds, so the method matters as much as the percentage.
In my view, Morningstar’s cost-quintile result is a reason to look at expense ratios first, whether you choose active or index funds.
In my view, the category table is the most practical part: it shows where the odds have been better and worse.

Sources

This article offers general information and my own opinions, not financial, tax, or legal advice. Past results do not guarantee future results. Laws, tax rules, and products change and can differ by location, so check current official sources and talk to a qualified professional about your own situation.

Do Active Funds Beat the Index? What Morningstar, SPIVA and a New Study Show