Last year was an historically bad year for active equity managers in the U.K. market, according to the latest S&P Indices Versus Active Scorecard.
The report, now in its 12th year in Europe, also found underperformance rates of 88%, 89% and 97% for broad U.K. Equity, U.K. Large-/Mid-Cap Equity and U.K.
Small-Cap Equity managers served up the 2nd, 3rd and 2nd worst rates in the 12 years of data since the first year of SPIVA Europe data in 2014.
The report found that U.K. market returns in 2025 were highly skewed in both the Large-/Mid-Cap Equity and Small-Cap Equity categories.
Overall, index performance was driven by a small number of stocks that delivered outsized returns. Failure to identify and hold adequate positions in these specific outperformers likely explains the high underperformance rates for the year. (Exhibit 2).
More than half of stocks either underperformed or outperformed the U.K. BMI by more than 25%, demonstrating ample opportunity for managers to overweight outperformers and underweight underperformers to generate excess returns.
However, significant underperformers outnumbered significant outperformers by more than two-to-one, meaning managers were statistically more likely to select laggards than winners. (Exhibit 3).
“2025 was a tough year for active equity managers across the U.K. market with the vast majority failing to outperform their benchmark indices. While there was opportunity for managers to differentiate themselves from the index, much of the gains were dominated by a very small number of stocks, making it difficult for managers to outperform unless they held those specific names.” said Tim Edwards, Global Head of Index Investment Strategy at S&P Dow Jones Indices.
