Actively managed mutual funds and exchange-traded funds (ETFs) in the United States regained some ground between July 2025 and June 2026, but continued to trail the average of comparable passive funds, according to the results of Morningstar’s US Active/Passive Barometer. This semi-annual report compares the performance of active funds against passive funds to help investors assess the likelihood of active management success across different asset classes, based on recent trends and long-term track records.
The semi-annual edition reveals that actively managed mutual funds and ETFs recovered somewhat between July 2025 and June 2026, though they still lagged behind the average of their passive peers. “Just over 40% survived and outperformed their asset-weighted passive composite index, representing a 7 percentage-point increase over the previous year,” the study notes.
Equities
U.S. equity managers posted an upward trajectory, logging a 38% success rate in the year through June 2026—a 4 percentage-point increase from the prior year. Small-cap and mid-cap active managers led the improvement, recording success rates of 49% and 47%, respectively, while large-cap managers (27%) weighed on overall U.S. equity success rates.
International equity fund managers held steady with a 44% success rate over the 12 months through June, matching the previous year’s figure. Diversified emerging markets active funds recorded the second-highest success rate across all categories in the study at 70%, reflecting a 35 percentage-point surge year-over-year.
The report notes that challenges persisted for global large-blend active funds—which hold both foreign and domestic stocks—despite a slight rebound in success rates. Only one-third of global large-blend managers outperformed their passive benchmark over the 12 months through June 2026; however, according to Morningstar, this marks a 7 percentage-point improvement compared to the previous year.
Fixed Income
Active fixed income managers enjoyed a strong first half. Success rates jumped 22 percentage points to reach 52% over the 12 months through June 2026. Active intermediate-core bond managers led the pack with a 66% success rate, while active corporate bond managers saw their success rate surge to 34%, up from just 4% in 2025. The fixed income group’s 10-year success rate of 45% beat every other category group analyzed in the report.
Active real estate funds saw success rates climb 36 percentage points to 61% over the 12 months through June 2026, recovering from a difficult stretch for active managers a year earlier.
Track Record
The long-term success rate of actively managed funds versus passive peers rose by 4 percentage points over the past 12 months. Still, only 25% of active strategies survived and outperformed their passive counterparts in the 10 years through June 2026. Long-term success rates were highest among fixed income and real estate funds, and lowest among U.S. large-cap equity strategies.
The distribution of 10-year excess returns for surviving active funds relative to the average passive peer varied by category. For U.S. large-cap funds, it tilted negatively, indicating that the performance penalty for choosing an underperforming manager outweighed the reward for selecting a winner. The opposite held true in the intermediate-core bond category, where excess returns skewed positive over the past decade.
Investors picked active funds wisely. Over the last 10 years, the average dollar invested in active funds outperformed the average active fund’s return in 16 of the 20 categories analyzed, indicating a clear investor preference for cheaper, higher-quality strategies.
Lower-cost active funds succeeded far more often than their higher-cost counterparts. Over the 10 years through June 2026, 33% of active funds in the cheapest quintile of their respective categories outperformed their average passive peer, compared to just 20% for the most expensive funds.
