Key Takeaways
- • Only 21% of active U.S. funds survived and beat their indexed peers over the decade through 2025, reinforcing passive indexing's structural advantage as the core portfolio anchor.
- • Fixed income remains the best-performing asset class for active management with a 42% 10-year success rate, but 2025 performance deteriorated sharply—active corporate bond managers achieved just 4% success rates as credit spreads whipsawed.
- • Selective active fixed-income ETFs from Nuveen, Invesco, and American Century are generating measurable alpha by identifying credit dislocations and market inefficiencies that broad indexes systematically miss.
- • Active intermediate-core-bond managers saw success rates collapse 26 percentage points to 55% in 2025, while active high-yield managers declined to 38%, underscoring the headwinds facing the broader active management universe.
Summary
The case for active fixed-income management remains contested, but recent performance data reveal a nuanced reality: while the vast majority of active managers continue to lag their benchmarks, certain targeted strategies are demonstrating consistent ability to outperform on a risk-adjusted basis.
According to Morningstar data cited in the analysis, the structural advantage of passive indexing is undeniable. In 2025, only 38% of active U.S. mutual funds and ETFs survived and beat their average passive peers—a four-percentage-point decline from the prior year. Over a 10-year horizon through 2025, the picture is even starker: just 21% of all active U.S. funds have survived and outperformed their indexed equivalents. This persistent underperformance explains why index-based ETFs remain the foundational core allocation for institutional and advisor portfolios.
However, fixed income presents a notable exception to this pattern. The asset class has delivered the strongest relative performance for active managers, with a 42% 10-year success rate—substantially higher than equity and other alternatives. Yet 2025 proved particularly challenging for active bond strategies. Credit spreads experienced significant volatility, resulting in dramatic performance compression: active corporate bond managers achieved just a 4% success rate, while active intermediate-core-bond managers saw their success rates plummet 26 percentage points to 55%. Active high-yield managers likewise deteriorated to 38% success.
Despite these structural headwinds, specific active fixed-income ETFs from asset managers including Nuveen, Invesco, and American Century have managed to generate measurable alpha by navigating credit market dislocations that broad-based indexes cannot exploit. These strategies succeed by identifying pricing anomalies, credit quality shifts, and sectoral opportunities that passive vehicles, bound by their index methodologies, systematically miss. For institutional investors and family offices seeking bond exposure beyond core index holdings, these targeted active vehicles merit consideration as a premium-priced but potentially value-accretive complement to passive anchor positions.
According to Morningstar data cited in the analysis, the structural advantage of passive indexing is undeniable. In 2025, only 38% of active U.S. mutual funds and ETFs survived and beat their average passive peers—a four-percentage-point decline from the prior year. Over a 10-year horizon through 2025, the picture is even starker: just 21% of all active U.S. funds have survived and outperformed their indexed equivalents. This persistent underperformance explains why index-based ETFs remain the foundational core allocation for institutional and advisor portfolios.
However, fixed income presents a notable exception to this pattern. The asset class has delivered the strongest relative performance for active managers, with a 42% 10-year success rate—substantially higher than equity and other alternatives. Yet 2025 proved particularly challenging for active bond strategies. Credit spreads experienced significant volatility, resulting in dramatic performance compression: active corporate bond managers achieved just a 4% success rate, while active intermediate-core-bond managers saw their success rates plummet 26 percentage points to 55%. Active high-yield managers likewise deteriorated to 38% success.
Despite these structural headwinds, specific active fixed-income ETFs from asset managers including Nuveen, Invesco, and American Century have managed to generate measurable alpha by navigating credit market dislocations that broad-based indexes cannot exploit. These strategies succeed by identifying pricing anomalies, credit quality shifts, and sectoral opportunities that passive vehicles, bound by their index methodologies, systematically miss. For institutional investors and family offices seeking bond exposure beyond core index holdings, these targeted active vehicles merit consideration as a premium-priced but potentially value-accretive complement to passive anchor positions.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.