Actively Managed Funds in Australia 2025: Performance, Pros & Cons

Australia’s investment scene is buzzing in 2025, and at the centre of debate is the age-old question: are actively managed funds delivering enough bang for your buck, or are index funds still king? With the ASX hitting new milestones, regulatory tweaks, and a growing appetite for tailored portfolios, it’s time to take a fresh look at active management.

What Does ‘Actively Managed’ Mean in 2025?

Actively managed funds are investment vehicles—like managed funds, ETFs, or super funds—where a professional manager (or team) makes ongoing decisions about which assets to buy or sell. The goal is to outperform a benchmark, such as the S&P/ASX 200, by capitalising on market trends, sector shifts, and company news.

While passive funds simply track the market, active managers aim to beat it, often using research, analytics, and sometimes a dash of intuition. In 2025, the line between active and passive is blurring, with more funds adopting a ‘smart beta’ or hybrid approach, combining elements of both.

Performance Check: How Are Active Funds Stacking Up?

The latest SPIVA Australia Scorecard (2025) shows that just over 40% of active Australian equity funds outperformed their benchmarks over the past year—a slight uptick from previous years, thanks in part to increased market volatility and sector rotations driven by changing interest rates and global trade dynamics.

• In Australian shares: A handful of active funds delivered 10-15% returns, outpacing the ASX 200’s 8.2% average for FY24-25.
• In global equities: Active managers fared better, with nearly half beating the MSCI World ex-Australia index, especially those with exposure to AI, renewables, and healthcare.
• Fixed income: With the RBA’s rate hikes in late 2024, active bond managers who navigated duration risk and credit spreads added value over passive bond ETFs.

But it’s not all smooth sailing. Over 5- and 10-year horizons, most active funds still underperform their benchmarks after fees. The recurring theme: some managers shine in certain market conditions, but consistent outperformance is rare.

Fees, Transparency, and the Regulatory Pulse

Active management isn’t cheap. In 2025, average management fees for active Australian equity funds sit at around 1.1% per year—more than double the cost of many index funds. While competition and digital disruption have nudged some fees lower, the gap remains a sticking point.

The Australian Securities & Investments Commission (ASIC) has stepped up scrutiny, requiring clearer disclosure of performance fees and tighter benchmarking. The MySuper reforms, which kicked in fully from July 2024, have also put pressure on underperforming super funds to justify their active strategies or risk being delisted from default options.

• Look for: Funds with ‘high conviction’ (fewer, bolder picks) that clearly explain their strategy and track record.
• Watch out for: ‘Closet indexers’—funds that charge active fees but closely mimic the index.

Who Should Consider Actively Managed Funds in 2025?

Active management isn’t a one-size-fits-all solution. It might be worth considering if you:

• Want exposure to niche sectors, emerging markets, or complex asset classes where research can add value.
• Prefer a hands-off approach but want a professional taking tactical calls during volatile periods.
• Are willing to pay higher fees for the chance of outperformance—and accept the risk it might not happen.

For most Aussie investors, a blend of low-cost index funds and select active strategies can strike the right balance of cost, risk, and opportunity.

2025 Trends: Technology, ESG, and Customisation

This year, technology is giving active managers new tools—AI-driven research, real-time analytics, and access to alternative data. At the same time, demand for ESG (environmental, social, governance) investing is pushing active funds to screen for sustainability, climate risk, and ethical considerations—areas where passive funds often lag.

Customisation is also on the rise, with direct indexing and managed accounts letting investors fine-tune exposure, tax outcomes, and values alignment—sometimes for lower costs than traditional active funds.