Introduction
Nasdaq eVestment’s annual Active Manager Performance report is a retrospective analysis of active equity and fixed income managers’ returns compared to their benchmarks over the past 10 years, this edition through 2025.
Our primary motivations are to determine whether or not actively-managed portfolios produce positive excess returns and the durability of any such alpha across time and across various universes of investible securities. To investigate if alpha exists at all, we prefer to focus on measuring manager skill which leads us to utilize gross-of-fees, over net-of-fees, performance. While end investors are invariably concerned with net returns, differing product access and fee negotiability are conflating variables to measuring skill. Put another way, agent economics should be beholden to the magnitude and consistency with which managers can produce alpha and are downstream of the analysis presented here.
Therefore, alpha persistence is of utmost importance. We present a variety of approaches to measuring the presence of structural positive, or negative, excess returns. Active managers’ ability to replicate outperformance over multiple horizons and the pervasiveness of positive alpha across strategies that invest in similar sets of securities are among our key metrics. Naturally, the methods presented here are not exhaustive at the cohort level, and even less so at the individual manager level. Further methodological details and information about manager cohorts can be found in the full report.
Insights
Equity markets largely rose in 2025, despite significant turbulence along the way. Despite total returns of 20.2% for the Nasdaq-100™ and 17.4% for the Russell 1000, U.S. equities underperformed against both developed and emerging markets during the year. Volatility arising from Liberation Day and other geopolitical shifts, and the resurgence in international equities were some of the primary narrative drivers for the year. From a factor standpoint, growth outperformed value in the U.S. led by the AI buildout trade. However, in international developed markets, value beat growth handily with the MSCI World ex-U.S. Value index posting a total return of 43.3% in 2025 versus the MSCI World ex-U.S. Growth index’s 22.3%. Lastly, small caps kept pace with large caps across international equities broadly, but underperformed in the U.S.
- Despite the diversity of managers in the active U.S. large cap value space, the universe performed admirably relative to other U.S. equity investment styles and against international developed markets equities over the past 10 years. A majority of the cohort (50.4%) outperformed the Russell 1000 Value over the decade, before fees, with a positive median excess return across most rolling 5-year windows over the period. To some extent, the outperformance of the Magnificent-7 and tech sector during this period meant that meaningful exposure to these names would produce significant uplift vis-à-vis benchmarks. U.S. large cap growth strategies’ beat rates against the Russell 1000 Growth were significantly lower (9.5% of managers) due to this factor.
- Active Europe equity managers have had a particularly hard run over the past 10 years with less than a quarter of managers outperforming their benchmarks. More targeted mandates including Europe REITs and Nordic equities had better results with 10-year beat rates in the 40%’s. From a macro level, European sector dispersion contributed more to underperformance than country dispersion in 2025. Asia-Pacific equity managers fared better than their European counterparts with an outperformance rate in 2025 of 47.2% (in aggregate across all sub-strategies) and 10-year beat rates sitting in the 30-40% range.
- Results were mixed for active small cap equity managers. U.S. small cap growth fared particularly well against the Russell 2000 Growth with 58.4% beating the benchmark over a 10-year period. Much of the outperformance came at the beginning of the decade with median annualized excess returns of 3.3% from 2016 to 2020. Furthermore, only 39.2% of U.S. small cap growth managers who beat the benchmark during that 5-year span did so in the ensuing five years (2021 to 2025). Lastly, U.S. small cap core and value, and global, Pan-Europe, and Canada small cap managers all posted even less consistent outperformance.
Fixed income performance was muted in 2025 with total returns of 1.3% for the Bloomberg Global Aggregate index and 1.5% for the Bloomberg Multiverse index. U.S., EU, and Japanese government bond yields steepened alongside a fall in the U.S. dollar with the U.S. Dollar Index (DXY) declining from 108.5 to 98.3. Credit spreads tightened throughout the year despite cross-asset geopolitical headwinds and narrative formation around the credit implications of the AI transition – yields-to-worst contracted year-over-year by 50 bps for the Bloomberg Global Credit index and 101 bps for the Bloomberg Global High Yield index.
- Active fixed income strategies have historically outperformed their benchmarks and 2025 was no exception. Core plus bond strategies, which share a benchmark with core bond strategies across our analysis, have a strong tendency to outperform their benchmarks, making use of the various portfolio construction levers available to them. Similarly, credit managers generally have had more favorable benchmark beat rates compared to high yield and bank loan managers. Overall, benchmark selection is a more complicated exercise in fixed income relative to equities. Multi-asset credit strategies, which are largely benchmark agnostic and which we choose to measure against a blend of high yield and leveraged loan indices, also look less favorable.
- Global multi-sector fixed income managers outperformed the Bloomberg Multiverse index consistently over the past decade. Among multi-sector fixed income managers that outperformed in the 2016-2020 period, 82.4% did so again in the ensuing five years; for multi-sector fixed income managers that underperformed in the first five years, 80.0% outperformed in 2021-2025. Median annualized excess returns over these 5-year periods were 1.2% and 4.4%, respectively.
- EM debt had a good run in 2025 with high single digit returns across most indices. 90.2% of EM local currency debt managers outperformed the JPM GBI-EM Global Diversified index in 2025, boasting the highest beat rate among EM debt universes during the year. Over longer periods, local, hard, and blended currency managers tend to beat their benchmarks at similar rates and excess returns do not meaningfully deviate from one another.
