A ctive managers in U.S. large-cap equities failed to beat the S&P 500 in 2025, with 79% of those managers underperforming the index. This follows a 2024 performance where 65% of the same class of managers lagged the index. 2025 was the fourth-worst year for active managers lagging the S&P 500 since S&P Dow Jones Indices began tracking the data in 2002.
Related Brief 8h ago
index funds A fund holding thousands of stocks can still be undiversified—if 10 names drive a third of its value
A fund holding thousands of stocks can still be undiversified—if 10 names drive a third of its value. As of March 31, 2026, the top 10 holdings account for approximately 34% of total market index funds, even though they represent just 0.3% of the underlying issuers. These funds, including the Vanguard Total Stock Market ETF (VTI) and the Fidelity Total Market Index Fund (FSKAX), hold 3,498 and 3,741 companies respectively. But because they are capitalization-weighted—each company’s weight determined by its total market value—the largest companies dominate. Nvidia (NVDA) alone makes up 6.2% of VTI as of February 28, 2026. Technology and communication services together account for 41% of the fund. Vanguard warns that more than 25% of the fund’s assets may be invested in issuers exceeding 5% of the portfolio, a threshold that classifies the fund as nondiversified under the Investment Company Act of 1940. That means the fund’s performance can be disproportionately hurt by a handful of stocks. An alternative is equal weighting, as seen in the Invesco S&P 500 Equal Weight ETF (RSP), where no single holding exceeds 0.28% and tech and communication services make up 22.5% of the portfolio. By contrast, the cap-weighted Vanguard S&P 500 ETF (VOO) allocates 7.31% to its largest holding and 43.9% to those sectors. But equal weighting demands constant rebalancing—buying losers and selling winners—which creates high turnover, higher fees, and higher volatility, undermining the core purpose of diversification: risk reduction. Nobel Laureate William Sharpe defined true diversification as owning all traded stocks and bonds globally in proportion to their market value. A cap-weighted total market index fund does exactly that for US stocks, reflecting the aggregate judgment of all investors. No other US stock fund offers broader exposure to the entire market.
Professional investors select individual equities to beat benchmarks, but the data shows a consistent failure to do so. The Vanguard S&P 500 ETF (VOO) provides exposure to the index's performance. VOO carries an expense ratio of 0.03%.
Related Brief 19h ago
personal finance Warren Buffett's Wealth Strategy Prioritizes Temperament Over Intelligence
The capture of compound interest increases total wealth over time. This outcome is the result of long-term holding of assets, which requires an investor to avoid the following of crowds. Warren Buffett states that temperament, not intellect, is the most important quality for an investor. He describes a temperament that neither derives pleasure from being with the crowd nor against it.
Warren Buffett directs a portfolio of 90% in a low-cost S&P 500 index fund and 10% in short-term government bonds as the asset allocation for his wife's trust.
Related Brief 1d ago
etf analysis An 18.3% upside forecast for the total U.S. stock market hinges on micro bets in obscure biotech and distilling stocks
An 18.3% upside forecast for the total U.S. stock market is only as strong as the obscure biotech and distilling stocks underpinning it. The Vanguard Total Stock Market ETF (VTI), with $587.54 billion in assets and 3,466 holdings, rose 0.067% in pre-market trading on April 15, 2026. Its year-to-date gain stands at 1.33%, with a 5.56% rise over the past five days. The ETF is rated a Moderate Buy by TipRanks’ analyst consensus, which aggregates weighted ratings on its underlying holdings. The average price target of $405.45 implies that upside. But that forecast does not rest on Apple, Microsoft, or even Nvidia. It is pulled upward by stocks like FiscalNote Holdings (NOTE), Sangamo Therapeutics (SGMO), Reviva Pharmaceuticals Holdings (RVPH), Curis Inc. (CRIS), and Heritage Distilling Holding Company (IPST)—five names among 3,466, each carrying negligible weight in the portfolio. The same market proxy that gives investors exposure to the full breadth of U.S. equities now has its forward outlook shaped by micro positions in unproven companies. VTI’s Smart Score of seven suggests performance in line with the broader market. The irony is that the ‘broader market’ it tracks may be moving in a direction set by its smallest, most speculative corners.
The Ledger Morning The essential intelligence to start your trading day. Delivered 6:00 AM EST.
Join 50,000+ professionals who start their day with The Digital Ledger.
