Over the last two years, I have been on a real journey around investing.
One of the things I keep hearing is the SPIVA argument.
For those unfamiliar, SPIVA (S&P Indices Versus Active) is regularly used by many passive and systematic investment providers to show that most active fund managers underperform over time.
At face value, that sounds compelling.
But I have always felt slightly uneasy about using one piece of data as the ultimate proof that one style of investing is superior to another.
Because in investing, context matters.
And data can often be used to support whatever argument someone wants to make.
What Is “Normal” Anyway?
I started working in financial services in the 1990s.
Back then, double-digit returns often felt normal.
Then came the 2000s.
Three negative years.
Dotcom crashes.
Banking crises.
Markets reminding us that investing is never linear.
Today, I sometimes wonder whether we are once again in a period where people are assuming recent market behaviour is “normal”.
History suggests markets have a habit of humbling certainty.
Interestingly, many of the large insurance funds of the 1990s looked remarkably similar to what we would now call passive investing today — broad market exposure, large diversified holdings, and benchmark-aware construction.
The labels may change, but the themes often repeat.
The SPIVA Question
So I started digging further into how SPIVA actually works.
At its core, SPIVA compares active fund managers against an index.
But here is the interesting point:
That index itself is actively constructed by S&P Global.
Then SPIVA compares all active funds against that benchmark.
The challenge is that “active” becomes a very broad bucket.
Traditional stock-picking funds sit alongside quantitative strategies, systematic approaches, factor-based investing, and firms such as Dimensional Fund Advisors that use structured evidence-based investing approaches.
Ironically, many systematic and factor-based providers use SPIVA data to support their own positioning — despite the fact they themselves are classified within the active universe being measured.
That is where the distinction starts to blur.
Active vs Passive Is Often Oversimplified
The investment industry loves labels.
Active.
Passive.
Growth.
Value.
Quality.
But real-world investing is usually far more nuanced.
Many so-called passive strategies still involve active decisions:
- Which index to track
- How the index is constructed
- Rebalancing rules
- Weighting methodologies
- Factor tilts
- Currency treatment
- ESG exclusions
- Risk controls
Even the choice of benchmark itself is an active decision.
Equally, many active managers today are far more systematic and disciplined than the old stereotype of “star managers making big bets”.
The reality is that investing sits on a spectrum.
Not in two neat boxes.
The Bigger Point
This is not an argument against passive investing.
Nor is it an argument for active management.
Both can work.
Both can fail.
The real point is this:
Whenever someone uses SPIVA as the definitive answer, it is worth stepping back and thinking critically about what is actually being measured.
Because ultimately:
- The benchmark is actively built
- The active universe is extremely broad
- Different strategies are grouped together
- Market cycles matter
- Definitions matter
Investing is rarely as simple as a single chart or headline statistic.
And perhaps that is the biggest lesson of all.
Money Wise UK View
The active versus passive debate often becomes tribal.
But good investing is usually less about labels and more about understanding:
- What you own
- Why you own it
- How it behaves in different markets
- Whether it aligns with your long-term goals
SPIVA can provide useful information.
But it should be the start of the conversation — not the end of it.
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