Passive vs Active Investing Statistics (2026)

The long migration from picking managers to buying the whole market has crossed a threshold: passive funds now hold most of the money. Index funds and ETFs make up roughly 55% of US long-term fund assets as of year-end 2025, up from about 53% a year earlier and just 19% in 2010.

This is one of the biggest structural shifts in modern investing. Where investors once paid managers to try to beat the market, most now pay a few basis points to simply match it, and the trend has only accelerated since the pandemic.

The tipping point came at the end of 2023. Total assets in index mutual funds and ETFs reached $13.29 trillion, edging past the $13.23 trillion held in actively managed funds, the first time passive products held more money than active ones in the US, per Morningstar data.

It had been coming for years. Passive had steadily taken share every year of the prior decade, so the crossover was less a shock than a milestone: confirmation that low-cost indexing had become the default rather than the alternative.

The share has climbed relentlessly. By ICI's count, index funds and ETFs were about 19% of long-term fund assets in 2010 and roughly half by 2023 (see the table below). On Morningstar's measure, passive reached about 53% at year-end 2024 and 55% at year-end 2025.

In equities the tilt is even sharper: index strategies now hold a clear majority of US stock-fund assets, a category where the case for cheap, broad exposure is strongest and where active managers have struggled the most.

The crossover was a near-tie; what followed was a widening gulf. By October 2025, passive assets had grown to about $19.1 trillion while active stood near $16.2 trillion, a roughly $3 trillion gap where two years earlier the two were neck and neck (see the chart below).

Two forces compound here. Passive keeps taking in new money while active leaks it, and because passive dollars sit disproportionately in low-cost equity index funds, strong stock markets inflate the passive pile faster than the active one.

The passive wave rides largely on ETFs. Total US ETF assets crossed $10 trillion for the first time in 2024 and topped $13 trillion in 2025, and ETFs now make up roughly a third of the US fund market, up from about 14% in 2014 and 5% in 2004.

Their tax efficiency, intraday trading, and rock-bottom fees have made ETFs the default wrapper for index exposure. A record 757 ETFs launched in 2024, 46% more than the year before, as issuers rushed to meet demand.

Follow the money and the shift is stark. Actively managed equity funds shed about $454 billion in 2024, their second-worst year on record, even as US stocks rose (see the table below). ETFs, by contrast, pulled in a record $1.1 trillion that year.

2025 pushed further: ETFs collected nearly $1.49 trillion, another annual record, while long-term funds overall gathered $765 billion (Morningstar). Investors are voting with their dollars for cheap, index-tracking exposure.

The flows follow the scoreboard. In Morningstar's Active/Passive Barometer, only 38% of active funds both survived and beat their average passive peer in 2025, down 4 points from 42% in 2024 (see the table below). Over 10 years, just about 21%, roughly one in five, managed it.

The barometer is broad, covering some 9,248 funds and $26 trillion, about two-thirds of the US market. Its verdict is consistent: in most years and nearly all long horizons, the typical active fund trails a cheap index fund in the same category.

S&P's SPIVA scorecard tells the same story from the benchmark side. About 65% of active large-cap US funds trailed the S&P 500 over one year, rising to 84% over 10 years and 92% over 20 (see the table below), per SPIVA Year-End 2024.

Most damning: over 15 years, not one of 22 US equity fund categories had a majority of managers beat their benchmark. Short-term luck fades, and over an investing lifetime beating the index becomes a near-impossibility for the average fund.

Active management is not hopeless everywhere. In 2025 its success rates were highest in diversified emerging markets (64%), intermediate-core bonds (55%), and foreign equity (48%), areas that are less efficient or harder to index cheaply (see the chart and table below).

But the edge is fragile. Real estate active funds, historically a bright spot, saw success collapse to 12% in 2025, down 54 points, and corporate-bond funds managed just 4%. The categories where active wins shift year to year, which is exactly what makes them hard to bet on.

Strip away the debate and cost explains most of the outcome. The average index equity mutual fund charged just 0.05% in 2024, against 0.64% for the average active one, a gap of nearly 0.6 percentage points paid every year (see the chart and table below), per ICI data.

Index ETFs are cheaper still: the asset-weighted average index equity ETF ran 0.14% in 2025 and index bond ETFs just 0.09%. Because active investing is close to zero-sum before costs, that fee wedge is most of why the average active dollar trails the average passive one.

A 0.6-point annual fee sounds trivial until it compounds. Fund fees have collapsed under passive competition: the asset-weighted equity mutual fund expense ratio has fallen 62% since 1996, and bond fund fees 57%, saving investors tens of billions a year.

Investors have concentrated in the cheapest options: about 81% of equity mutual fund assets now sit in the lowest-cost quartile of funds. The average dollar pays close to the minimum, which is itself a symptom of the passive shift.

Even when an active fund wins, picking it in advance is the hard part. S&P's Persistence Scorecard found that 0% of top-quartile US equity funds stayed in the top quartile four years later, and only about 4% held even a top-half ranking, worse than random chance.

That is the quiet killer of the active case. It is not just that most funds lose; it is that yesterday's winners provide almost no signal about tomorrow's, so chasing past performance tends to buy high and sell low.

The story is not purely passive-takes-all. Active managers have adopted the ETF wrapper to compete on cost and tax efficiency, and active ETFs took in roughly $475 billion in 2025, about a third of all ETF inflows that year.

Still, active ETFs remain a small slice of a market dominated by S&P 500 and total-market index funds. The wrapper is changing, but the underlying flows keep favoring broad, cheap, index-based exposure over stock-picking.

The data points one way for most investors: a low-cost, broadly diversified index portfolio has beaten the large majority of active attempts over time, and costs almost nothing to hold. That is why passive has won the majority of the market's money.

It does not mean active is always wrong; in select bond and international niches it still competes, and a clear thesis can justify concentrated bets. The lesson is to be deliberate: know why you are paying for active, keep costs low, and anchor the core of a portfolio in cheap, diversified index exposure.