In 2025, a small group of tech super stocks dominated the market, causing frustration among investors. Active equity mutual funds saw $1 trillion in outflows, while passive equity ETFs gained over $600 billion. The S&P 500 outperformed its equal-weighted version, causing challenges for active managers and investors seeking alpha outside of Big Tech.

The market was characterized by narrow participation, with fewer than one in five stocks rising on many days. 73% of equity mutual funds underperformed their benchmarks, with exceptions like Dimensional Fund Advisors LP’s International Small Cap Value Portfolio. The year highlighted the importance of global diversification and sticking with winners.

Despite high valuations in the tech sector, analysts believe the bull market will continue for another two years. Thematic investing in areas like alternative energy and base metals saw success in 2025. Investors faced the challenge of paying the price for being different, as active management remained relevant but demanding conviction and tolerance for volatility.

Goldman Sachs Asset Management found success in actively managing a diverse portfolio of roughly 15,000 stocks worldwide. The firm’s proprietary model delivered gains of around 40% across various funds. The key takeaway for investors was the need for a data-driven approach to navigate the market’s concentration and find opportunities beyond Big Tech.

Read more at Yahoo Finance: Brutal Year for Stock Picking Spurs Trillion-Dollar Fund Exodus