Core Insights - T. Rowe Price is collaborating with Goldman Sachs to offer private-market investments, indicating a strategic shift in response to the growing popularity of such assets [1][5] - Active stock pickers are facing challenges from index funds, which are gaining traction due to their lower fees and strong performance, particularly in the context of a rising S&P 500 [2][6] - The demand for target-date funds, which are popular among 401(k) savers, presents an opportunity for active managers to integrate private investments into their offerings [3][4] Group 1 - The rise of private-market investments is creating new opportunities for active managers, despite the competitive pressure from passive investment options [1][2] - Target-date funds are becoming increasingly popular, allowing for a blend of active and passive strategies, which could benefit from the inclusion of private investments [3][4] - The collaboration between T. Rowe Price and Goldman Sachs, including a $1 billion investment from Goldman Sachs into T. Rowe Price, signifies a merging of traditional and alternative asset management strategies [5] Group 2 - The focus on lowering fees among plan sponsors is critical, as many are shifting towards more cost-effective passive options for target-date funds [6] - The potential integration of private investments into target-date funds raises concerns about maintaining low overall costs, given that private investments often come with higher fees [7]

Core Insights - Active funds have struggled to outperform index funds over the past year, even during volatile market conditions [1][4] - Only 33% of actively managed mutual funds and ETFs had higher asset-weighted returns than their index counterparts from July 2024 to June 2025, a decline of 14 percentage points from the previous year [2] - Long-term performance shows that only 21% of active strategies outperformed their index counterparts over the past 10 years [4] Performance by Sector - Success rates for active funds vary significantly by sector, with U.S. large-cap stock funds consistently underperforming their index counterparts [5] - Only 14% of actively managed U.S. large-cap funds have beaten the S&P 500 over the past decade [5] - Active managers tend to perform better in less liquid markets, such as fixed income, real estate, and small-cap stocks [6][7] Fee Impact - Fees are a critical factor in the performance disparity between index and active funds, with index funds averaging a 0.11% fee compared to 0.59% for active funds [9] - Higher fees necessitate that active funds achieve greater relative returns to compensate for the fee difference [9] - The impact of fees on long-term earnings is significant; for instance, a 1% fee can result in $29,000 less over 20 years compared to a 0.25% fee [10] Market Behavior - Index funds inherently own all securities in a market index, ensuring they capture both winners and losers, while active managers risk missing out on market rebounds [11] - Active managers often adjust their strategies in response to market events, which can lead to missed opportunities [11]