Active fund managers in Australia have fallen short of their benchmarks in 2025 and over the past decade, with the trend fuelling growing demand for exchange-traded funds (ETFs), according to Global X CEO Alex Zaika.
The latest SPIVA Australia Scorecard revealed that the majority of actively managed funds underperformed across asset categories, both in the short term and over longer horizons.
Over the 10 years to June 2025, 94 per cent of global equity managers and around 84 per cent of Australian general equity managers failed to keep pace with their benchmark indices.
According to Zaika, these findings have highlighted structural weakness within active management.
“Even more striking is that in 2025, in what has been a very strong year for global sharemarkets, most Australian equities managers still did worse than their benchmarks.
“While the S&P/ASX 200 gained 6.4 per cent in the first half of 2025, actively managed traditional Australian equity funds on average rose just 4.5 per cent, with 71 per cent performing worse than the Australian benchmark index,” he said.
He added that although market conditions in 2025 seemed favourable for stock pickers, they largely failed to capture the upside, something Zaika described as a “long-term trend”.
“Over the 15-year span, 85 per cent of Australian general equities funds failed to beat their benchmark and that was true for 96 per cent of global equities managers.
“In other words, most global and Australian equities managers perform worse with time, so this is not a short-term phenomenon, but an entrenched theme both here in Australia and in the US.”
SPIVA’s data also revealed how rare sustained outperformance has been. Of the 127 Australian equity general funds that outperformed in 2022, only one continued to do so in 2023 and 2024.
This pattern, Zaika said, underscores that “while active managers exist to outperform their benchmarks, most can’t do it consistently or over the long term.”
He added that this apparent weakness in active management has coincided with stronger demand for index-tracking ETFs. According to Zaika, investors are seeking better returns and lower costs.
The CEO further noted that ETFs have “opened up global markets and paved the way for Australians to create more wealth” by tracking major offshore indices or targeting growth industries such as artificial intelligence and semiconductors.
This shift has mirrored global patterns as long-term SPIVA data for both Australia and the US has shown underperformance rates climbing steadily, even during periods when active managers appear to regain ground.
The mid-year 2025 report found global equity managers enjoyed a temporary reprieve, with 54 per cent underperforming compared with a long-term average of 71 per cent. But over 15 years, almost all global managers fell behind.
Zaika argued that as investors confront these figures, ETFs are likely to become a central building block of portfolios.
“Investors are increasingly demanding that investment managers provide better returns at lower cost,” he said.
While broad studies show most active managers lag benchmarks, Ausbil recently argued there remains a clear role for active strategies.
According to portfolio manager Michael Price, in Ausbil’s Active Dividend Income Fund – Active ETF (ASX: DIVI), the active approach has allowed the fund to target higher income and competitive total returns compared with passive strategies.
Since inception, DIVI has delivered 9.18 per cent per annum (net of fees), closely tracking the S&P/ASX 200 Accumulation Index’s 9.38 per cent, while providing investors with monthly, inflation-linked dividend income and franking credits.
Price stated its edge comes from “active dividend investing” and selects 25 to 50 Australian companies and staggering payout schedules to generate more dividends over the year, rather than simply chasing higher yields.
