S&P Persistence Scorecard Reveals Universal Struggles for Active Strategies

The debate between active and passive management has reached a fever pitch in the first half of 2026. As market volatility lingers, the latest S&P Persistence Scorecard reveals a sobering reality for active managers. The scorecard provides a comprehensive look at retail mutual funds and ETFs domiciled in the U.S., revealing that consistent outperformance is an anomaly across the board.

The data underscores that even top-tier performance is often fleeting; the ability of a fund to remain in the top quartile of its peer group is statistically rare. Whether an advisor utilizes an active mutual fund or an active ETF, the persistence of success remains elusive. This lack of consistency explains why low-cost, passive index strategies continue to command the lion’s share of assets, even as the industry sees a record-breaking wave of active ETF launches.

Key Takeaways

• The S&P Persistence Scorecard indicates that less than 1% of all domestic equity funds — including both ETFs and mutual funds — managed to remain in the top quartile for five consecutive years.
• Data shows that performance is often mean-reverting, with top-performing funds in one period frequently falling to the bottom half of their categories in subsequent years.
• Record inflows into S&P 500-linked ETFs in 2026 highlight a growing advisor preference for low-cost, index-based consistency over the high volatility of active returns.

Using the S&P Persistence Scorecard to Analyze Mutual Fund & ETF Performance

The S&P Persistence Scorecard highlights that of the domestic equity funds in the top quartile in 2021, only 0.46% managed to stay there through December 2025. This statistic is particularly striking because it encompasses the entire U.S. fund universe, regardless of vehicle wrapper. For advisors, this suggests that the active management alpha they are paying for is often a product of luck rather than repeatable skill.

Midcap and small-cap categories showed even more pronounced results in the latest report. Not a single midcap fund that was in the top quartile in 2021 remained there by the end of the five-year period. This lack of durability in performance has made it increasingly difficult for advisors to justify the higher fees often associated with active ETFs and mutual funds.

Consequently, the industry has seen a historic flight to quality and consistency. So far in 2026, S&P 500-based ETFs have captured a significant share of market flows, as investors abandon strategies that fail to show staying power. The shift is increasingly data-driven, as advisors look at the high probability of underperformance and choose the reliability of the benchmark.

Why Advisor Flows Are Shifting to Passive S&P 500 ETFs

It is important to note that while some active ETFs have gained popularity for their tax efficiency, the underlying performance data remains a headwind. The persistence of these funds is often no better than their mutual fund predecessors. As a result, the trend of 2026 is becoming defined by a retreat to the core — minimizing manager risk in favor of broad market exposure.

The current market environment rewards simplicity and cost-efficiency. With persistence figures hitting near-zero levels in several categories, the fundamental role of passive ETFs in portfolios appears to be a natural evolution in portfolio construction.

Originally published on Advisor Perspectives

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