Most Active Funds Lag, But Some Shined in 2024

Active fund managers strive to outperform their benchmarks, yet most fall short over time.

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Pick & Scroll News
March 25, 2025

Active fund managers strive to outperform their benchmarks, yet most fall short over time. While investors may hope to boost returns by selecting actively managed funds, the latest data confirms an ongoing trend - only a small percentage consistently beat their indices, with global equity funds performing the worst.


In Australia, active fund managers particularly struggle in global stocks, where 95% underperform their benchmarks over 15 years. Even well-known firms that once enjoyed success have eventually faced setbacks. This highlights a dilemma for investors: while some actively managed funds deliver short-term gains, the long-term odds favour a passive investment approach using index funds and exchange-traded funds.


However, mid-small cap Australian equity funds and bond funds have shown more promise. In 2024, 63% of Australian mid-small cap funds beat their benchmarks, delivering an asset-weighted average return of 14.5%, compared to 10.5% from the broader index. Bond funds also outperformed, with 70% exceeding benchmarks and achieving a 3.9% return versus 2.9%. Despite consistent short-term success, the majority of funds in these categories still fail to outperform over longer periods.


Zooming out, the broader active management landscape remains challenging. Over a 15-year period, 87% of active Australian A-REIT funds underperformed, while 82% of active bond funds lagged behind. Global equity funds fared worst, with 85% of active managers failing to beat the index in 2024. A high concentration of returns among top-performing stocks also posed challenges for large-cap active managers, limiting their ability to find opportunities.


For investors considering active management, the data underscores the importance of selecting funds carefully. While some niche categories, such as mid-small cap equities and bond funds, have achieved short-term success, long-term trends continue to favour lower-cost passive investing strategies.