Key Data and Analysis
S&P Persistence Scorecard: active U.S. large-cap fund outperformance after fees
| Period | % Active Funds Beating S&P 500 After Fees |
|---|---|
| 1 year | 35% |
| 5 years | 18% |
| 10 years | 10% |
| 15 years | 7% |
| 20 years | 6% |
⚠️The 6% Problem
Only 6% of actively managed U.S. large-cap funds beat the S&P 500 after fees over 20-year periods. Paying active fee is betting on 6:94 odds with no reliable method to identify the winning 6% in advance.
Scenarios and Comparison
$100,000 over 20 years: index vs. active fund scenarios
| Strategy | Net Return | 20-Year Value ($100K) | 20-Year Fees |
|---|---|---|---|
| S&P 500 index (0.03%) | 7.97% | $467,000 | $6,000 |
| Typical active (0.75%) | 7.25% | $406,000 | $62,000 |
| Outperforming active (lucky 6%) | 8.25% | $490,000 | $62,000 |
| Underperforming active (94%) | 6.25% | $337,000 | $62,000 |
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