Think you can outsmart the market? Spoiler alert: even the pros rarely do.

Answer: 9%

Only 8% of equity funds investing in large companies beat the market.

Explanation: 91% of fund managers underperformed the S&P 500. The remaining 9% met or beat the S&P 500.

Questions:

• Why do you think investing professionals struggle to "beat the market?”
• Why do you think investors still invest their money with professionals despite their record?
• Your friend says "you are better off investing with professionals instead of buying a simple index fund (e.g., S&P 500) that matches the market return." Do you agree or disagree?

Here are the ready-to-go slides for this Question of the Day you can use with your students.

Behind the numbers (SPIVA):

"Amid the macro ructions, there were plentiful opportunities to tilt toward outperforming large caps. A 6% performance differential between The 500™ and the S&P MidCap 400®, and a 10% differential between The 500 and the S&P SmallCap 600®, may have enabled managers situated in the smaller end of the capitalization range to generate greater relative performance; only 25% of All Mid-Cap funds and only 22% of All Small-Cap funds underperformed to the year’s mid-point.1 Notably, the small-cap  underperformance rate was even lower than the 30% reported for 2024, the latter representing the lowest annual underperformance rate across more than two decades of our annual SPIVA Scorecards (see Exhibit 2). Meanwhile, the majority outperformance for mid-cap funds was a significant improvement from last year’s results."

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Teach students about index funds with the most popular game in the NGPF Arcade, STAX. 

About the Author

Dave Martin

Dave joins NGPF with 15 years of teaching experience in math and computer science. After joining the New York City Teaching Fellows program and earning a Master's degree in Education from Pace University, his teaching career has taken him to New York, New Jersey and a summer in the north of Ghana. Dave firmly believes that financial literacy is vital to creating well-rounded students that are prepared for a complex and highly competitive world. During what free time two young daughters will allow, Dave enjoys video games, Dungeons & Dragons, cooking, gardening, and taking naps.