Like King Kong vs. Godzilla, the investment debate of active vs. passive continues.
I really enjoyed those cheesy old movies from Japan that pitted the two big monsters of science fiction. But as I recall, there was never a clear winner: Sometimes King Kong won the battle, sometimes Godzilla.
Similarly, the battle of active vs. passive continues. It seems like the battle has been won more lately by passive. In fact, in Exhibit 1, which charts the percentage of all active equity managers in the U.S. that beat their benchmarks over the past 25 years, we can see that passive has indeed been winning most recently. In fact, fewer than 50% of managers have beaten their benchmarks over each of the last five years, with the past fiscal year being the worst result. I charted these managers to be on a July 1 to June 30 fiscal year to be consistent with the fiscal years of most pension funds, endowments, and foundations.