Why 95% of Investors Can’t Beat the S&P 500 (and What Actually Helps)
Charlie Munger put the odds at roughly 95% against. The data on professionals and individuals points the same way. The reasons are structural, and most of them can be fixed.
ResourcesGuide
What Percentage of Fund Managers Beat the Market?
The best data on this question comes from S&P Dow Jones Indices’ SPIVA scorecards, which have compared active funds with their benchmarks for 25 years. Here are the latest numbers by time horizon, fund type and year, and what explains them.
Key takeaways
- About 1 in 5 in a single year and 1 in 10 over 15 years. 79% of active large-cap US funds trailed the S&P 500 in 2025, 89.9% over 15 years and 92.9% over 20 (SPIVA Year-End 2025).
- A majority of large-cap managers trailed the index in 22 of the 25 years from 2001 to 2025, including every year since 2010.
- Results are a little better in smaller companies (41% of small-cap funds trailed in 2025) but still poor over long periods.
- Winning rarely lasts: only 4.5% of above-median large-cap funds stayed above median year after year, below the 6.25% expected by chance.
Market risk reading, cross‑asset context and an events calendar: see Exent →
How many active funds beat the S&P 500 over time?
Fewer and fewer the longer you look. Percentage of all active large-cap US funds that trailed the S&P 500, from the last two year-end SPIVA U.S. Scorecards:
| Horizon | Trailed, to Dec 31, 2025 | Trailed, to Dec 31, 2024 | Beat, to Dec 31, 2025 |
|---|---|---|---|
| 1 year | 79% | 65.2% | about 21% |
| 3 years | — | 85.0% | — |
| 5 years | — | 76.3% | — |
| 10 years | 85.6% | 84.3% | about 14% |
| 15 years | 89.9% | 89.5% | about 10% |
| 20 years | 92.9% | — | about 7% |
Year-end 2024 figures as quoted by Ritholtz Wealth Management; dashes are horizons not covered in the sources checked. SPIVA counts funds that were merged or liquidated during the period, so it is not flattered by only looking at survivors.
Do active managers ever beat the market in a given year?
Rarely as a group. In only 3 of the 25 years from 2001 to 2025 did a majority of active large-cap funds beat the S&P 500. Selected years from the SPIVA U.S. Mid-Year 2025 and Year-End 2025 reports:
| Year | Large-cap funds that trailed the S&P 500 | Context |
|---|---|---|
| 2005 | 49% | One of three years a majority beat the index |
| 2007 | 45% | Best year for active managers in the series |
| 2008 | 56% | Financial crisis: most still trailed |
| 2009 | 48% | Recovery year, majority beat the index |
| 2014 | 87% | Worst year in the series |
| 2021 | 85% | Large-cap rally led by the biggest stocks |
| 2022 | 51% | Bear market: barely a majority trailed |
| 2024 | 65% | |
| 2025 | 79% | Fourth-worst year of 25 |
The median across all 25 years was 65%. The pattern is consistent: the years when the largest stocks lead, as in 2014, 2021 and 2025, are the hardest for active managers, because most funds hold less of the giants than the index does. The guide on S&P 500 concentration explains why that matters more today.
Do some kinds of funds do better?
Somewhat, in some years. In 2025, per SPIVA Year-End 2025, the share of funds trailing their benchmark varied by category:
| Fund category (2025) | Benchmark | Trailed |
|---|---|---|
| All large-cap | S&P 500 | 79% |
| Global | S&P World Index | 76% |
| International | S&P World Ex-U.S. | 63% |
| All mid-cap | S&P MidCap 400 | 55% |
| All small-cap | S&P SmallCap 600 | 41% |
Small-cap managers had a good year partly because the S&P 500 beat the small-cap index by 12% in 2025, according to S&P DJI, so funds that drifted toward larger companies looked better against a small-cap benchmark. That is a style effect, not necessarily stock-picking skill. Over 10 years and more, majorities trailed in every major category.
Do the managers who beat the market keep doing it?
Very rarely. In the U.S. Persistence Scorecard Year-End 2025, only 4.5% of large-cap funds in the top half stayed in the top half every following year. Random chance would have produced 6.25%. Picking last year’s winning fund has historically been a weak strategy, which is why separating skill from luck matters before paying for active management.
Why do most fund managers fail to beat the index?
- Costs. Management fees, trading costs and cash drag come off every year. The index pays almost none of them.
- Few stocks drive the market. In Exent’s data only 36.5% of today’s large US stocks beat the S&P 500 over the 10 years to Sep 30, 2026. A fund holding 50 to 100 names is likely to miss some of the rare big winners. More in how many stocks beat the S&P 500.
- Competition. Large US stocks are among the most closely analyzed securities in the world, so mispricings are small and short-lived.
- Size. Most funds hold less of the largest companies than the index does, so they fall behind whenever those companies lead.
What does this mean for individual investors?
- A low-cost index fund has historically beaten most professional alternatives over long periods.
- If you use an active fund, judge it over 10 years or more and after fees, against the benchmark it actually resembles.
- Last year’s top performer is a weak guide to next year’s.
- The same odds apply to your own stock picks: measure them against the passive version of the same bets.
The guides on whether beating the S&P 500 is a realistic goal and stocks vs index funds go further. The fair test for your own holdings, including any active funds, is a risk-matched benchmark: a passive mix with the same risk, which shows whether the active choices earned their cost.
How to test your own holdings with Exent
- Upload a screenshot of your holdings, or a CSV, Excel, PDF or Google Sheet; no brokerage login.
- Exent compares the portfolio, including any active funds, with a risk‑matched benchmark, and shows Sharpe, Sortino and Calmar ratios side by side.
- The holdings scorecard labels each position Wealth Generating, Wealth Preserving, Prospect or Risky.
Frequently asked questions
About 21% of active large-cap US funds beat the S&P 500 in 2025, about 10% over the 15 years to 2025 and about 7% over 20 years, according to S&P Dow Jones Indices’ SPIVA Year-End 2025 scorecard.
SPIVA (S&P Indices Versus Active) is a scorecard published twice a year by S&P Dow Jones Indices. It compares actively managed funds with their benchmarks and includes funds that closed or merged.
Slightly at times, but not reliably. In 2022 a bare majority, 51%, still trailed the S&P 500; in 2008, 56% did.
In some years. Only 41% of small-cap funds trailed in 2025, partly because funds that leaned toward larger companies benefited when large caps outperformed. Over long periods most still trailed.
SPIVA covers publicly offered active funds, not hedge funds. Hedge funds have different goals, fees and risk, so they need their own comparison.
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Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.