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Investor returns lag mutual funds and ETFs by 1.2 points
Morningstar estimates the investor shortfall totaled nearly $3.8 trillion over the roughly $13.6 trillion in assets covered by its study.
Investors in U.S. mutual funds and ETFs earned an average annual return of 8.7% over the 10 years ended December 31, 2025, while the funds themselves returned 9.9%, leaving a 1.2 percentage point gap, according to Morningstar research cited by ETF Trends.
Morningstar attributes the difference to the impact of investors’ purchase and sale decisions, estimating that the shortfall amounted to nearly $3.8 trillion in foregone wealth across an asset base of roughly $13.6 trillion covered by the study.
The research found that some strategies help investors capture more of the underlying fund performance, noting that U.S. stock fund investors captured virtually all of the returns generated by the funds they owned, at 12.8% versus 13.3% annually over the same period.
Morningstar also linked larger gaps to higher volatility, saying the least-volatile funds had an investor return gap of -0.4% compared with -2.1% for the most volatile funds, and that fees showed smaller variation by comparison. ETF Trends highlights the implication for advisors: evaluate cost and risk together and consider whether clients can realistically stay invested through drawdowns.