Time and again, reports highlight increasing enthusiasm from the greater investor community towards actively managed strategies, whether it be for the potential for defensive flexibility or hopes of long-term outperformance. However, is the data necessarily backing up the active enthusiasm? Recently, S&P Global released its 2025 SPIVA U.S. scorecard. This report has a longstanding precedent for its use as a barometer in the ongoing active vs. passive management debate.
Unfortunately for the active management bulls, the latest SPIVA scorecard has offered less-than-enthusiastic results for active funds. To start, the report found that 79% of all actively managed large-cap U.S. equity funds ended up underperforming the S&P 500.
Making matters worse, this weak performance marks a stark climb from last year’s numbers. In 2024, the amount of large-cap funds underperforming compared to the S&P 500 was about 14% lower.
When considering that actively managed funds often charge higher fees than the kind of fund that passively tracks the S&P, this performance gap is only made more troubling. Investors are paying higher fees for funds that, on average, may end up offering weaker performance than a more basic indexed approach.
A More Challenging Environment For Stock Picking
The question is, why is this happening? Why are active managers struggling to pull ahead of the classic indexed approach? According to the report, outperforming large-caps made it more difficult for active stock pickers to find diamonds in the rough to snag for their portfolios.
To be fair, it’s important to remember that 21% of active large-cap U.S. equity funds did, in fact, outperform the S&P 500. This report should serve as a reminder to do due diligence to make sure an active strategy is the right fit. If not, a passive, indexed strategy could be better.
When in doubt, a classic, low-cost indexed approach tied to the S&P 500 may offer a fair path forward through today’s uncertain economy. Recently, many investors have chosen to allocate to the Vanguard S&P 500 ETF (VOO ), likely due to some of the aforementioned reasons. As of March 2, 2026, the fund has seen over $17 billion in net flows over the past month.
Based on its track record, these net flows are likely quite justified. As of February 28, 2026, the fund’s NAV has risen 16.95% over the last 12 months.
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