Our work on active management addresses some shortfalls of the traditional analysis, which uses the median product to describe the active management universe as a whole. These improvements and insights have allowed us to better understand product behavior and may allow for more informed selection in the future.

  • Even without skilled selection, there are many cases in which active management may help investors achieve better portfolio outcomes in risk and return terms.
  • Those better portfolio outcomes may come from additional return or lower risk. Not all investors have the same definition of better outcomes, and the risk/return trade-offs vary by universe.
  • Adding skilled selection to the process may create additional value in portfolio construction.
  • Fees remain an important part of the active management conversation. Fees and survivorship bias should be taken into account when analyzing active universes.

Using median product (median manager) performance to decide whether active management is beneficial can be misleading. This new tool can help investors make better-informed decisions.

What changed for 2026?

  • The past year presented an environment of resilient economic growth, despite general expectations that 2025 would prove to be a slow growth or perhaps recession year for the domestic economy. The labor market weakened materially, although there is evidence that immigration policy and trends may be a contributing factor. Inflation moved lower but appears to be stuck materially above the Fed 2% target, which has led to hesitance amongst the Federal Reserve Open Market Committee to cut rates too quickly.
  • All major asset classes outside of high-quality fixed income delivered strong returns, in continuation of a multi-year trend. Readers of this document will observe particularly high returns over the past three years, which also helped lift longer lookback periods.
  • In equities, return dispersion over the prior three years was incredibly wide, leading to the tall vertical shape of chart “ovoids”. We suspect incredible volatility across value, growth, and quality styles contributed to extreme performance disparity in certain active manager universes.
  • Outside of U.S. large cap equity, this period appears to have been a relatively attractive environment for active management, with many skilled strategies achieving substantial outperformance over benchmarks.

For more, review our full report on the active management environment.

Cerity Partners Retirement Plan Advisors LLC d/b/a Cerity Partners Retirement Plan Consultants and Cerity Partners Institutional Consulting (“RPC”, “CPIC”, “we,” “us” or “the Adviser”) is registered with the U.S. Securities and Exchange Commission as an investment adviser and is a wholly-owned subsidiary of Cerity Partners LLC. Registration as an investment adviser does not imply any level of skill or training.

The information contained herein is not personalized investment, tax, or legal advice and is for informational purposes only. There is no guarantee that any views or opinions expressed will come to pass. This information is subject to change without notice and should not be considered an offer to sell or a solicitation to buy any security. Past performance is not indicative of future results. Before making any decision that may affect your retirement plan or finances, consult a qualified professional adviser.

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