The majority of active managers underperform their benchmarks - but why?

In this episode of the Global Thinking Podcast Rob sits down with Dr. Joseph Nelesen, Head of Specialists, Index Investment Strategy at S&P Dow Jones Indices, to unpack the 2024 SPIVA Report—the definitive study comparing active fund managers to their benchmarks.

The discussion explores how most active managers have underperformed their benchmark, the critical role of survivorship bias, and the impact of fees and market conditions on long-term performance. Joe shares eye-opening statistics including how almost half of all funds over a 10 year period cease to exist and the fact that zero managers maintain their top quartile ranking over a five-year period.

Rob and Joe also dive into ETF investing, analyzing the trends shaping active management today and what investors should consider when building portfolios. Whether you're an investment professional or an individual investor, this conversation delivers valuable insights into the ongoing debate between active versus index strategies and how market efficiency may be impacting your investment decisions.

https://www.indexologyblog.com/2025/01/08/shifting-tides-concentration-dispersion-and-the-sp-500-risk-landscape/

Chapters

00:00 Introduction to Global Thinking Podcast

01:07 Meet Dr. Joseph Nelesen

05:53 Understanding the SPIVA Report

13:15 Key Findings from the 2024 Report Card

19:04 The Challenge of Persistence in Active Management

25:54 Trends in Active Management and ETF Usage

27:57 Exploring Fixed Income Strategies

30:41 The Dynamics of Equal Weighting in S&P 500

31:55 Active vs. Passive Investing: A Deep Dive

35:06 The Role of Fees in Investment Performance

38:27 Understanding Long-Term Underperformance Trends

39:36 Due Diligence in Selecting Active Managers

41:52 The Evolution of Market Efficiency

44:22 Personal Insights and Recommendations

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