Passive ETFs vs Active Funds: SPIVA Data After 20 Years

Passive ETFs vs Active Funds: SPIVA Data After 20 Years

The debate between active and passive management has been at the heart of investment strategies for several decades. While active funds promise to outperform the market through rigorous stock selection, passive ETFs simply replicate the performance of a benchmark index at a lower cost. The data from the 2023 SPIVA (S&P Indices Versus Active) report, which analyzes the performance of active funds relative to indices over the long term, provides clear insight into this issue. This article presents a detailed analysis of the 20-year results, focusing particularly on the U.S. and French markets, incorporating the decisive impact of management fees. We will conclude with the implications for intermediate French investors.

SPIVA 2023: Index Domination Over 20 Years

The SPIVA report is a global benchmark that systematically compares the performance of active funds to stock market indices. In 2023, the 20-year data confirm a very pronounced trend:

• United States: 92.2% of active U.S. equity funds underperformed the S&P 500 index over 20 years.
• France: 78% of active French equity funds underperformed the CAC 40 over 20 years.

These figures are unequivocal: the vast majority of active funds fail to beat their benchmark indices over two decades. This underperformance is mainly explained by high management fees and structural difficulties in anticipating market movements over the long term.

Detailed Performance Analysis: US vs France

The average annualized return of the S&P 500 over 20 years is approximately 8.5%, while the CAC 40 shows about 5.5% over the same period. The average management fees for active funds are generally around 1.2% in the United States and 1.5% in France, which significantly impacts the net performance for the investor.

The Devastating Impact of Fees: A Major Hidden Cost

A key element often underestimated is the weight of management fees on final performance. An in-depth study shows that annual fees of 2% (a value often approached by some active funds) can reduce the accumulated capital by more than 45% over a 30-year period.

Let's illustrate this with a numerical example: