Actively managed mutual funds and ETFs failed to beat their passive counterparts in 2025, according to the semi-annual Active/Passive Barometer from Morningstar. The findings confirm earlier Morningstar research showing that actively managed funds rarely remain in the top quartile of performance in their categories beyond a year.
Only 38% of actively managed mutual funds and ETFs beat their asset-weighted average passive composite last year, the firm’s data shows. The figure was even lower than the performance recorded by active funds in 2024, by 4 percentage points.
The funds’ 10-year record remained flat with the year prior, with 21% of funds beating their passive peers. In the long term, the most consistently outperforming active funds were those pursuing bond and real estate strategies, Morningstar found. Funds investing in U.S. large caps showed the weakest rate of success over a 10-year period.
However, active funds in both the bond and real estate categories underperformed in 2025. Across the fixed-income categories included in the barometer, outperformance fell by 24 percentage points to 40%. Across the real estate categories, outperformance declined by 54 percentage points to 12%.