Media release: InvestSMART says new research strengthens case for indexing
Media release
InvestSMART says new research strengthens case for indexing as most active fund managers fail to beat the market
Sydney (18 September 2025): Leading investment platform InvestSMART highlights the findings of the latest SPIVA® Australia Mid-Year 2025 Scorecard, which once again shows most actively managed funds fail to outperform their benchmarks over time. And the longer the timeframe, the greater the likelihood of an actively managed fund failing to beat market returns.
According to the SPIVA report, the majority of actively managed Australian equity funds underperformed the S&P/ASX 200 over one, five, 10 and 15 year timeframes.
The long-term results are particularly stark. SPIVA found 85% of actively managed funds lagged their benchmark over 15 years.
It was a similar story for global equity and bond funds which also consistently underperformed across longer horizons.
Mr Ron Hodge, CEO of InvestSMART, said these results reinforce the case for investors to rethink their approach.
"The evidence is overwhelming. Most active fund managers fail to beat their benchmark over time. Yet actively managed funds typically charged higher fees to investors. The upshot is that over time investors can experience the double whammy of after-fee returns that are well below market performance," said Mr Hodge.
Mr Hodge believes the results of the latest SPIVA Scorecard underscore the value of building a portfolio centred around low cost, passively managed exchange-traded funds (ETFs) that aim to mirror market returns rather than beat them.
"Research continually shows just how difficult it is to beat the market in a single year, with the likelihood of outperformance falling rapidly over time," noted Mr Hodge.
InvestSMART has long championed a simple, low-cost strategy for Australians: Build wealth by investing in a diversified portfolio of ETFs that follow an indexing approach rather than relying on costly active managers who rarely deliver long term returns that are above-market.
"With costs and underperformance eating into returns, Australians deserve a smarter way to invest. Passive ETF portfolios give investors the trifecta of transparency, diversification and low fees, all of which add up to a much better chance of decent after-fee returns over the long term," concluded Mr Hodge.
At a glance: Results of the SPIVA® Australia Mid-Year 2025 Scorecard
The SPIVA Scorecard has again confirmed that the vast majority of actively managed funds fail to beat their benchmarks over time — across Australian equities, global equities, bonds, and A-REITs.
6 key takeouts from the report:
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Australian Equity General Funds: 71% underperformed the S&P/ASX 200 in the first half of 2025. Over 15 years, the figure rises to 85%.
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Global Equity Funds: 54% underperformed year-to-date. However, underperformance compounds over time — 96% lagged the benchmark over 15 years.
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Australian Equity Mid- and Small-Cap Funds: 63% underperformed year-to-date, with 74% falling behind over 10 years.
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Australian Bonds: Nearly half (46%) failed to beat the benchmark in the first half of 2025. Over 10 and 15 years, 67% and 76% of managers underperformed respectively.
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Australian Equity A-REIT Funds: Half of funds underperformed in the first half, and 85% trailed the benchmark over 15 years.
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Survivorship: Over a 15-year horizon, more than half of all funds across categories had either merged or closed, underscoring the challenge of relying on active management for consistent returns.
Contact
Ron Hodge
CEO & Founder, InvestSMART
📧 r.hodge@investsmart.com.au
📞 0404 878 824
Frequently Asked Questions about this Article…
The SPIVA Australia Mid‑Year 2025 Scorecard found most actively managed funds failed to beat their benchmarks. The majority of Australian equity, global equity, bond and A‑REIT active funds underperformed over one, five, 10 and 15 year timeframes, with long‑term underperformance particularly pronounced.
According to the SPIVA report cited by InvestSMART, 85% of actively managed Australian equity funds underperformed the S&P/ASX 200 over a 15‑year period.
Yes. The report shows global equity funds underperformed year‑to‑date (54%) and 96% lagged the benchmark over 15 years. For Australian bonds, 46% failed to beat the benchmark in the first half of 2025, with 67% and 76% underperforming over 10 and 15 years respectively.
InvestSMART argues that low‑cost, passively managed ETFs that mirror market indexes offer transparency, diversification and lower fees. Because most active managers fail to beat benchmarks and often charge higher fees, passive ETF portfolios can give investors a better chance of stronger after‑fee returns over the long term.
The SPIVA data highlighted by InvestSMART shows the likelihood of active managers outperforming falls the longer the timeframe. Short‑term outperformance is rare, and underperformance rates rise substantially over five, 10 and 15 years.
Survivorship refers to funds that have merged or closed. The SPIVA scorecard found that over a 15‑year horizon more than half of all funds across categories had merged or closed, underscoring the difficulty of relying on active management for consistent, long‑term returns.
Key stats highlighted by InvestSMART include: 71% of Australian Equity General Funds underperformed the S&P/ASX 200 in the first half of 2025 (85% over 15 years); 54% of global equity funds underperformed year‑to‑date (96% over 15 years); and about half of A‑REIT funds underperformed in H1 with 85% trailing over 15 years.
InvestSMART recommends reconsidering reliance on costly active managers and building a diversified portfolio centred on low‑cost, passive ETFs that follow an indexing approach. This strategy aims to capture market returns while minimising fees and improving the chances of better after‑fee outcomes over the long term.
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