Prices already hold most of what is known. Beating them needs an edge few people have.
The market is hard to beat.
Five funds and their last five years. Rank them by how they will do over the next ten. Best first.
Last five years told you almost nothing; most funds trail the plain market.
← Red LinesRed Line 26 of 48 The idea The numbers Where you see it Where it bends This game’s numbersHow strong the proof isAStrong proof Where it comes from
When news is public, prices move on it within minutes. To beat the market you must know something others don’t, or judge it better, again and again.
Over ten years, around nine in ten professionally run equity funds in Europe end behind their index after fees, year after year of reports.
An index fund doesn’t try to pick the best. It owns the whole market, cheaply, and so beats most of those who try.
Markets are not perfect; bubbles and panics happen. But knowing a price is wrong and profiting from it are not the same.
S&P Dow Jones Indices, SPIVA Europe year-end 2024S&P Dow Jones Indices, SPIVA Europe year-end 2022S&P Dow Jones Indices, SPIVA Europe year-end 2021
Decades of fund data in Europe and the US, from independent teams, agree: most active funds trail the market after costs, and the few that do well are hard to find in advance.
- Morningstar European Active/Passive Barometer, Midyear 2026 Eugene Gorbatikov & Jose Garcia-Zarate, Morningstar Manager Research, 2026
- Luck versus Skill in the Cross-Section of Mutual Fund Returns Eugene F. Fama & Kenneth R. French, The Journal of Finance 65(5), 1915-1947, 2010
- The Arithmetic of Active Management William F. Sharpe, Financial Analysts Journal 47(1), 7-9, 1991
Checked 2 Nov 2026 · How we grade
- A Strong proof: Many good studies or long official data, from different teams or countries, point the same way.
- B Good proof, with limits: Solid studies agree on the direction, but the size varies, or the data covers few places or few kinds of people.
- C Mixed proof: Some good studies for, some against, or the evidence covers only part of the line.
- D Thin proof: Mostly one book’s argument, one survey or stories. It may be wise, but it has not been tested well.
- = True by the sums: It follows from arithmetic, so no study can overturn it. We still show what real data says.
Eugene F. Fama, “Efficient Capital Markets: A Review of Theory and Empirical Work”, The Journal of Finance (1970). In our words, not quoted.
See it in numbers: Active funds · Index funds (From Zero)
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