Active Fund Managers Beat the Market at Highest Rate Since 2007
Large-cap active mutual funds are enjoying their strongest run in nearly two decades, according to new data from Goldman Sachs.
- 57% of large-cap active funds are beating benchmarks in early 2026 – the best rate since 2007.
- Market gains are broadening beyond mega-cap tech, helping stock pickers.
- Long-term data still favors passive: most active funds underperform over 10 years.
- Lower fees and active ETFs are improving the odds, but persistence remains rare.
As of mid-February 2026, 57% of large-cap active managers are beating their benchmarks – the highest success rate since 2007.
The shift comes after years of dominance by passive strategies and index funds, raising fresh questions about whether active stock picking is staging a lasting comeback or simply benefiting from a temporary market rotation.
Market Broadening Fuels Active Comeback
The recent outperformance is largely attributed to a broadening of market leadership. In 2023 and 2024, returns were heavily concentrated in mega-cap technology stocks – often labeled the “Magnificent Seven.”
In early 2026, however, gains have spread to sectors such as industrials, financials, and defense, creating more dispersion across earnings and valuations. Wider dispersion tends to favor active managers who can overweight improving sectors and underweight laggards.
Strategists from HSBC Asset Management and T. Rowe Price argue that 2026 could reward stock pickers as earnings growth broadens beyond mega-cap tech. Analysts at BNY Institute also expect broader participation to support selective strategies.
Morningstar and SPIVA Paint a Tougher Picture
Despite the encouraging short-term data, longer-term performance remains challenging for active management.
According to the Morningstar Active/Passive Barometer, only 38% of active funds both survived and outperformed their passive peers in 2025 – a decline from the prior year. For the 12 months ending June 2025, just 33% of large-cap active funds beat their index benchmarks.
More strikingly, historical data from the S&P Dow Jones Indices SPIVA scorecard shows that roughly 84% of large-cap funds underperformed the S&P 500 over a 10-year period through late 2024. Over a decade, only 14% managed to outperform consistently.
These figures underscore a key theme in the active-versus-passive debate: short-term windows of success are common, but long-term persistence remains rare.
The Fee Factor
Cost continues to be a major differentiator. Morningstar analysts emphasize that lower-fee active funds have a significantly higher probability of long-term success compared with higher-cost peers.
Even in a more favorable environment, management fees can erode excess returns, making cost discipline critical for investors considering active strategies.
Rise of Active ETFs
At the same time, active strategies are increasingly migrating to the ETF structure. In early 2026, roughly 85% of new fund launches were active strategies, many in ETF format.
Active ETFs have recently outperformed traditional active mutual funds in several categories, partly due to lower internal costs and improved tax efficiency. Firms such as State Street Global Advisors highlight the structural advantages of ETFs as managers adapt to investor demand for transparency and efficiency.
What It Means for Investors
The average forecast for the S&P 500 in 2026 stands near a 12% return, according to aggregated projections. If market gains continue to broaden across sectors, the environment could remain supportive for active managers.
However, historical evidence suggests that sustained outperformance is difficult. While 2026 may offer tactical opportunities for stock pickers, long-term data indicates that beating the index over a full cycle remains the exception rather than the rule.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
