SPIVA mid-year data shows most Canadian active funds lagging benchmarks across time horizons
A new report from S&P Dow Jones Indices suggests that Canada’s active fund managers continue to face an uphill battle against index benchmarks, with most strategies falling short across multiple time horizons.
The latest SPIVA Canada Scorecard, which tracks actively managed funds against their respective market benchmarks, found that a large majority of Canadian funds underperformed during the first half of 2025. The study covers multiple segments of the market including domestic, U.S., global and international equity strategies.
Across all categories analysed, more than 71.2% of active funds trailed their benchmarks over the six-month period ending June 30, highlighting the persistent challenge of delivering alpha in public markets.
Canadian equity strategies struggled to keep pace with the broader market. While the S&P/TSX Composite Index advanced 10.2% in the first half of 2025, actively managed Canadian equity funds returned roughly 9.2% on an equal-weighted basis and 9.1% when weighted by assets.
As a result, 69.7% of Canadian equity funds underperformed the benchmark over the six-month period. The picture worsened when measured over longer horizons: underperformance rates climbed to 94.7% over one year, 93.7% over three years, 84.5% over five years, and 97.6% over 10 years.
Funds focused more narrowly on Canadian equities also struggled. Nearly 94.8% of Canadian focused equity funds failed to beat their blended benchmark in the first half of the year.
Dividend-oriented strategies showed somewhat stronger relative performance. Canadian dividend and income equity funds posted the lowest short-term underperformance rate among the groups examined, with 44.2% falling behind their benchmark over the six-month period.
However, their longer-term results still deteriorated sharply. Over periods ranging from one to 10 years, the share of funds lagging the benchmark rose above 90% in several timeframes, according to the report.
Small- and mid-cap managers faced an even steeper challenge. The S&P/TSX Completion Index surged 13.1% during the first half of the year, while 100% of Canadian small- and mid-cap equity funds underperformed that benchmark.
The pattern extended beyond domestic markets. Among funds investing in U.S. equities, 71.4% lagged the S&P 500 in the six-month period. Over longer horizons, the majority of these funds also trailed the benchmark, with underperformance rates approaching 96% over 10 years.
International and global equity funds delivered similar results. Around 66.1% of global equity funds failed to match the S&P World Index during the first half of the year, while long-term underperformance in the category exceeded 95% over three- and five-year periods.
The report also highlights structural pressures within the active fund universe. Over the past decade, 45.9% of Canadian equity funds either merged or were liquidated, while roughly 38.7% of funds disappeared across all categories during that period.
For investors and advisors navigating the active versus passive debate, the findings reinforce a long-running trend. Since the SPIVA scorecards began tracking fund performance more than two decades ago, actively managed strategies have frequently struggled to consistently outperform their benchmark indexes.
The latest Canadian data suggests that, at least for now, the challenge of beating the market remains as difficult as ever.
