In 2015 I, along with some of my colleagues, began working on a project to more systematically measure active managers’ success rates in a given Morningstar Category. Specifically, we were looking to answer this question: If an investor were to select an actively managed fund at random from a particular category, what are the odds that fund will survive and outperform its passive peers in any given time period? The product of our efforts is the Morningstar Active/Passive Barometer.
The Active/Passive Barometer is a semiannual report that measures the performance of U.S. active managers against their passive peers within their respective categories. The Active/Passive Barometer report is unique in the way it measures active managers’ success relative to the actual, net-of-fee performance of passive funds rather than an index, which isn’t investable.
Ben Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.