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Passive dividend equity funds underperform active rivals

Morningstar findings are in stark contrast to other fund categories where passive funds tend to outperform over time
Most active funds typically deliver worse returns than cheap passive alternatives over meaningful periods of time

Passive index-tracking equity income funds have “consistently” underperformed their actively managed rivals over the past decade, research from Morningstar has shown.

The findings are highly unusual in that the vast majority of active funds typically deliver worse returns than cheap passive alternatives over meaningful periods of time, at least after their higher fees have been taken into account. 

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