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Kiplinger
Kiplinger
Business
James K. Glassman

MYSTERIOUS: In defense of actively managed funds - What They Never Told You

Fidelity ETrade Index Fund Morningstar Schwab Vanguard
A group of diverse people seated around a table looking at financial charts .

I'll start with what you already know: Index funds, with portfolios determined by computer algorithms to reflect categories of stocks and bonds, have a much better track record than funds whose stocks and bonds are selected by human beings — so-called actively managed funds.

Over the 10 years ending December 31, 2025, research firm Morningstar calculates, only 3.6% of active large-capitalization growth funds have beaten the average index fund in the same category.

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