Active Fund Outperformance Rarely Lasts, Study Shows
Advisors should avoid chasing actively-managed ETFs and mutual funds based on short-term outperformance, according to a new study from research firm Morningstar.
The study, which examined roughly 9,000 mutual funds and ETFs from 2021 through 2024, found that by year two, the majority had fallen out of the top quartile of funds in their categories.
Advisors have been increasing their allocations to ETFs in recent years, and more of their money is going toward active ETFs, according to recent data from Escalent. Escalent found that, currently, 80% of advisors have allocations to active ETFs, and their share of active ETF assets rose from 25% in 2024 to 29% in 2025. Advisors pointed to factors like access to a wider range of markets and…
