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We’re hearing it again: this is a stock picker’s market.
That narrative tends to show up whenever uncertainty rises. Whether it’s inflation, interest rates, or geopolitical tension, the argument is the same. With more dispersion and more unknowns, skilled active managers should have a better opportunity to outperform.
It sounds reasonable. The challenge is that we’ve heard it before. And the data hasn’t supported it.
Twice a year, Standard & Poor’s SPIVA report gives us a scorecard on active management. The latest update, through 12/31/2025, doesn’t reflect the headlines of 2026, but it does reflect something more important. It shows how active managers have performed across a wide range of market environments over time.
The results are difficult to ignore.
Over the past year, nearly 80% of all domestic equity funds underperformed their benchmark. That’s already a tough starting point. But what stands out is what happens as the time horizon extends.
At 10 years, roughly 90% of funds underperform. At 20 years, that number climbs to around 95%. The longer the time horizon, the less this looks like a coin flip and the more it looks like a structural disadvantage.
Poor relative performance in the long run is not isolated to one part of the market. Large-cap, mid-cap, small-cap, growth, value. The pattern remains the same. If this truly were a stock-picker’s market, we would expect to see that show up somewhere in the data. Instead, we see the opposite.
So why does this keep happening?
Markets aren’t easy to beat because they reflect the collective judgment of millions of investors. Every trade represents a difference of opinion, and prices adjust quickly as new information becomes available. To consistently outperform, an active manager has to be right more often than the collective view.
Then you layer in fees, taxes, and trading costs. Even small disadvantages, compounded over time, create a meaningful headwind.
There's also a behavioral challenge that often gets overlooked.
Even if a small group of managers outperform, the lack of persistence means past winners rarely help us identify future winners. The funds that look attractive are often those with strong recent performance. By the time they are widely recognized, much of that outperformance may already be behind them.
That dynamic can lead to performance chasing and ultimately, poor timing decisions.
The goal isn’t to outguess the market or find the next winning manager. It’s to build a process that is grounded in evidence and focused on what we can control. Costs, diversification, and discipline.
Today’s environment may feel different, with new risks, new headlines, and new uncertainties. Despite that, the case for active management tends to follow a familiar pattern, and the results have been consistently poor.
This isn't about dismissing active management entirely. It's about understanding the odds. The SPIVA report doesn't predict the future, but it does provide a clear picture of the past. Over time, the evidence has not been kind to active managers.
The narrative will keep changing. The data hasn't. That's worth something the next time someone tells you this is finally a stock picker's market.
Week in Review
- The FOMC concludes its third meeting of 2026 on Wednesday, April 29th. Markets overwhelmingly expect the Fed to hold rates steady, with Fed funds futures implying a near‑certainty of no change. Looking ahead, futures markets are no longer pricing in a 25‑basis‑point cut by year‑end, reflecting uncertainty around oil prices tied to ongoing Middle East tensions.
- The March U.S. Retail Sales report showed a stronger‑than‑expected 1.7% increase, the largest monthly gain since March 2025, driven largely by a 15.5% surge in gas station sales. Stripping out volatile categories like gas and automobiles, core retail sales rose 0.7%, well above expectations of a 0.2% gain, pointing to underlying strength in consumer spending.
- According to FactSet, 28% of the S&P 500 reported Q1 results as of April 24th. The earnings growth rate, blended between companies that have already reported and the estimates for those that have yet to report, now stands at 15.1%, which would mark the sixth-straight quarter of double-digit earnings growth reported by the index. FactSet also noted that the blended net profit margin for the S&P 500 is currently at 13.4%, which would mark the highest net profit margin reported since FactSet began tracking this metric in 2009.
Hot Reads
Markets
- The Fed's Rate Cuts Are on Pause, But Are They Also Off the Table? (WSJ)
- Why the Stock Market is Hitting Records Despite Iran War (CNBC)
- In a Slow Market, Some Houses Are Still Selling Fast (WSJ)
Investing
- Long-Term Money (Morgan Housel)
- The S&P 500 Bump That Doesn't Last (Larry Swedroe)
- It's Getting Harder to Tell Investing From Gambling, and It's Not Your Fault (Jason Zweig)
Other
- Why Kids Need to Take More Risks - TED-Ed (YouTube)
- The 3-Foot Putting System Every Golfer Needs to Know - Titleist (YouTube)
- War, Oil, and Stock Market Resilience - DFA (YouTube)
Markets at a Glance
Fund Returns
Sector Returns
Factor Returns
Source: Morningstar Direct.
Source: Morningstar Direct.
Source: Treasury.gov
Source: Treasury.gov
Source: FRED Database & ICE Benchmark Administration Limited (IBA)
Source: FRED Database & ICE Benchmark Administration Limited (IBA)
Economic Calendar
Source: MarketWatch
- Competition, Achiever, Relator, Analytical, Ideation
Josh Jenkins, CFA
Chief Investment Officer, Principal
Josh Jenkins, Chief Investment Officer, began his career in 2010. With a background in investment analysis and portfolio management from his previous roles, he quickly advanced to his current leadership position. As a member of the Lutz Financial Board and Chair of the Investment Committee, he guides Lutz Financial’s investment strategy and helps to manage day-to-day operations.
Leading the investment team, Josh directs research initiatives, while overseeing asset allocation, fund selection, portfolio management, and trading. He authors the weekly Financial Market Update, providing clients with timely insights on market conditions and economic trends. Josh values the analytical nature of his work and the opportunity to collaborate with talented colleagues while continuously expanding his knowledge of the financial markets.
At Lutz, Josh exemplifies the firm’s commitment to maintaining discipline and helping clients navigate market uncertainties with confidence. While staying true to the systematic investment process, he works to keep clients' long-term financial goals at the center of his decision-making.
Josh lives in Omaha, NE. Outside the office, he likes to stay active, travel, and play golf.
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