Think you can outsmart the market? Spoiler alert: even the pros rarely do.

Answer: 8%

Only 8% of equity funds investing in large companies beat the market.

Explanation: 92% of fund managers underperformed the S&P 500. The remaining 8% met or beat the S&P 500.

Questions:

• Why do you think investing professionals struggle to "beat the market?”
• Why do you think investors still invest their money with professionals despite their record?
• Your friend says "you are better off investing with professionals instead of buying a simple index fund (e.g., S&P 500) that matches the market return." Do you agree or disagree?

Here are the ready-to-go slides for this Question of the Day you can use with your students.

Behind the numbers (SPIVA):

In an environment characterized by large-cap dominance, it was not surprising to see that a majority of actively managed equity funds underperformed their assigned benchmarks in 2024. Fixed income managers had a mixed year, with pockets of high outperformance. In our largest and most closely watched comparison, 65% of all active large-cap U.S. equity funds underperformed the S&P 500®, worse than the 60% rate observed in 2023 and slightly above the 64% average annual rate reported over the 24-year history of our SPIVA Scorecards.

Across asset classes, underperformance rates typically rose as time horizons lengthened. At the one-year horizon, 7 of 22 equity categories and 11 of 16 fixed income categories saw majority outperformance. Over the 15-year period ending December 2024, there were no categories in which a majority of active managers outperformed.

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Teach students about index funds with the most popular game in the NGPF Arcade, STAX. 

About the Author

Kathryn Dawson

Kathryn (she/her) is excited to join the NGPF team after 9 years of experience in education as a mentor, tutor, and special education teacher. She is a graduate of Cornell University with a degree in policy analysis and management and has a master's degree in education from Brooklyn College. Kathryn is looking forward to bringing her passion for accessibility and educational justice into curriculum design at NGPF. During her free time, Kathryn loves embarking on cooking projects, walking around her Seattle neighborhood with her dog, or lounging in a hammock with a book.