Low-cost active ETFs succeeded at nearly double the rate of their expensive counterparts over the past decade, according to Morningstar’s year-end 2025 Active/Passive Barometer report, underscoring how fees remain the primary hurdle for active managers attempting to outpace index funds.
The research found that 31% of active funds in the cheapest quintile of their categories beat their average passive peer over 10 years. This is compared with just 17% for the priciest funds, according to the report. The findings suggest that the longstanding active versus passive debate may actually be a low-cost versus high-cost debate. Additionally, fund expenses may play an outsized role in determining investor outcomes.
The data arrives as T. Rowe Price positions its “Active Core ETF” suite with a temporary fee waiver, bringing net expense ratios to zero through January 2027 for funds including the T. Rowe Price Active Core U.S. Equity ETF (TACU) and the T. Rowe Price Active Core International Equity ETF (TACN).
After the waiver expires, the two ETFs still remain firmly in the low-cost active category at only 14 basis points and 20 basis points, respectively.
Fixed Income Shows Active Strength
Bond strategies emerged as the most fertile territory for active management. Fixed income funds posted a 42% success rate over the past decade, the highest among all asset class groups examined, according to Morningstar. The research noted that fixed income “has been a fertile hunting ground” for managers, with intermediate core bond funds achieving a 55% success rate in 2025.
The findings highlight the case for actively managed bond funds that keep costs low. The T. Rowe Price QM U.S. Bond ETF (TAGG ) carries an expense ratio of 0.08%, according to ETF Database. The fund attracted $63.57 million in net flows over the past month and returned 1.2%. TAGG holds $1.85 billion in assets.
The T. Rowe Price Total Return ETF (TOTR ), another bond strategy with a 0.31% expense ratio, holds $557.1 million in assets and saw $4.07 million in monthly inflows while posting an over 1% one-month return, according to ETF Database.
The firm launched its two low-cost Active Core ETFs in December 2025. TACU holds $11.9 million with $1.25 million in monthly flows. Meanwhile, TACN has gathered $19.5 million including $1.32 million over the past month, according to ETF Database. International stock managers saw their success rate increase to 48% in 2025, an 8-percentage-point gain from the prior year, according to Morningstar.
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