When starting a new NISA, I think many people get lost wondering, “Should I choose All Country or S&P 500?”
Just as concerning is the question, “Which is better, index or active?”
Active mutual funds are products where investment professionals select stocks and aim to outperform an index. If a pro is managing it, it feels like it might be more profitable than an index.
However, I think it is rational to focus on index funds for the long term.
It is not that all active mutual funds are bad, and there are indeed funds that outperform the index.
But when thinking about where to invest for a long-term new NISA, I want to choose index funds.
This time, I thought about the reasons from the perspectives of data and costs.
Can active mutual funds beat the index?
Of course, there are active mutual funds that outperform the index.
For example, among US large-cap active funds in the first half of 2025, about half underperformed the S&P 500, and nearly the other half outperformed it.
Looking at it over a short period, it feels like active mutual funds might be fine.
However, the fact that there are funds that beat the index is different from whether you can pick a winning fund.
As for how it looks over a long period,
about 90% of US equity funds sold in Japan underperformed the S&P 500 in 2025 apparently.
Regarding global equity funds, about 90% also resulted in underperforming their benchmark indices.
This is just a judgment based on past results, but if about 90% underperform the index over the long term, it makes me feel like index funds are the correct answer. Reference:
SPIVA Japan Scorecard (Year-End 2025 Edition) | S&P Dow Jones Indices
The difference in trust fees is significant
Also, what concerns me is the difference in trust fees.
While there are low-cost index fund products with annual fees around 0.1%, some active mutual funds have fees exceeding 1% per year, and the difference in trust fees is surprising.
To compare, I ran a simulation for investing 30,000 yen every month for 20 years.
Investment Simulation
【Calculation Conditions】
Monthly investment amount: 30,000 yen
Investment period: 20 years
Assumed annual return before fees: 5%
Index fund management fee: 0.1% per year
Active fund management fee: 1.1% per year
Calculated assuming annual returns after deducting management fees of 4.9% and 3.9%, respectively.
※Rough estimate assuming monthly investments and a constant return after fee deductions.
Taxes and costs other than management fees are not considered.
Even if you invest the same amount, after 20 years there is a difference of approximately 1.31 million yen‼️
Of course, there is a possibility that an active fund could generate higher returns and close this gap, but a 1% difference looks significant when viewed this way.
It’s not that any index fund will do
After reading this far, you might think, “Then any index fund is fine,” but that is not the case.
For example, the investment targets of the All Country World Index (ORCAN) and TOPIX are completely different.
The product you choose will change depending on what you want to invest in, such as whether you want to invest broadly across the entire world or focus on Japanese stocks.
When I choose a mutual fund, I roughly check the following in the prospectus.
Does the investment target match my goal?:
Which countries, regions, or assets will it invest in?
Is the management fee low?:
If the investment targets are similar, lower costs are better.
Can I continue the investment for a long time?:
Is the total net asset value at a scale where it is unlikely to be prematurely redeemed?
I think the important thing is being able to convince yourself of “why I am buying this fund.”
If you hold active mutual funds
I have focused on index funds up to this point, but I don’t want to deny the act of holding active funds itself.
Choosing them for reasons like “I want to invest in this theme” or “I like this investment policy” is one way to enjoy investing.
For example, the “Nomura Global Sector Investment Series (Global Semiconductor Stock Investment)” is a fund that gained attention against the backdrop of the AI and semiconductor boom, and its total net assets exceeded 1 trillion yen in June 2026.
I also hesitated about whether to buy it, but I felt a little disappointed that I ultimately decided not to because the management fee was high.
Of course, popularity and the ability to obtain high returns in the future are two different things.
If you are going to hold active mutual funds, I think it is best to set your own personal rules and engage with them while being conscious of the balance and costs of your entire portfolio.
Summary: Make Index Funds the Core of Your Long-Term New NISA
We have looked at the data and cost differences, and
I think it is reasonable to focus on index mutual funds if you are building assets for the long term.
The reasons are as follows.
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While there are funds that beat active mutual funds, it is difficult to choose a fund that will continue to win in the future.
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The difference in trust fees can amount to a large sum over the long term.
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With index mutual funds, it is easy to choose products that allow you to invest in a broad market at a low cost.
Even with index mutual funds, there is a risk of losing principal, but being able to continue without strain is important.
For those who are unsure about what to buy for the new NISA, I think considering index mutual funds as your core is one option.
Which do you choose, index or active?
*This article summarizes personal thoughts and does not recommend or solicit any specific financial products. Investing carries the risk of losing principal.
Please make investment decisions based on your own goals and risk tolerance.