The latest SPIVA Australia Scorecard has shown 78 per cent of Australian equity actively managed funds underperformed the S&P/ASX 200 index in the first half of 2026.
The analysis compares the performance of index offerings against actively managed products and also found, when extrapolated out over a 15-year period using SPIVA annual returns, this level of underperformance meant a fund tracking the S&P/ASX 200 index would have grown around $35,240, while an actively managed Australian share fund would have experienced approximately $30,524 growth over the same timeframe.
Investsmart chief executive Ron Hodge suggested some of the underperformance can be explained by the higher fees active managers charge for their service proposition.
“The manager has to overcome that extra cost before they’ve added a cent of value. If almost nine in 10 Australian share funds underperform over 15 years, investors should be asking what exactly they’re paying extra for,” Hodge noted.
He pointed out investors can favour actively managed funds because often they feel confident about identifying a star performer, but this logic is flawed given the historical longevity of these managers.
To this end, the S&P Separate Persistence Scorecard data revealed out of 70 Australian equity general funds ranked in the top quartile in 2023, only five still existed in both 2024 and 2025.
“If you pick an active fund because it has beaten the market, you’re making two bets: that the past performance came from skill rather than luck and that whatever produced that outperformance will persist,” he said.
With regard to chasing performance, the Investsmart 2026 ETF (exchange-traded fund) Scorecard highlighted the reliability of this approach, finding, of the 10 best-performing ETFs in the previous financial year, five generated losses over the following 12 months, while six of the previous year’s 10 worst performers subsequently delivered positive returns.
“Our own ETF research tells a similar story. Performance tables are very good at giving you a recent history lesson. They’re much less useful at telling you what happens next,” Hodge recognised.
According to Hodge, the SPIVA Australia Scorecard demonstrates how the increasing number of low-cost index ETFs has changed the choice facing investors.
“Twenty years ago, getting broad market exposure cheaply wasn’t nearly as simple. Today you can buy a broad index ETF, own hundreds of companies and access the market at very low cost,” he explained.
“Investors should be asking: ‘What evidence is there that paying more and taking manager risk is likely to leave me better off?’”
He acknowledged some Australian market active managers can produce good results for their clients, particularly in the small-cap and medium-cap arenas, but indicated investors should acknowledge how difficult it is to outperform the index.