Report : Investment | November 02, 2020

Patience with active performance cyclicality: It's harder than you think

All actively managed funds—even the long-term winners—will inevitably have periods of underperformance. But how bad can it get? This white paper from Vanguard Investment Strategy Group looks at the evidence for active equity funds over the past 25 years and makes the case for patience as a key to active management success.

If past trends hold, even those funds that outperform their benchmarks over the long run can expect to have lagging performance in roughly half of all one-year periods. In addition, over ten years, they are likely to have one drawdown that's 20 percentage points worse than their benchmark and one drawdown lasting two years or more.

The lesson is clear: Investors need patience to outlast the periods of lagging performance to ultimately achieve the potential for superior long-term results.

Learn more from the research paper.


  • All investing is subject to risk, including the possible loss of the money you invest.
  • Past performance is no guarantee of future returns.