Only one in two sterling-denominated funds that existed ten years ago are still available to investors today, according to research from S&P.
The US firm's latest SPIVA (S&P Index Versus Active) report also found that very few active managers managed to outperform their relevant S&P benchmarks over long-term time horizons, although funds in more volatile market areas such as emerging markets or UK small cap fared better.
Commenting on the research, Matt Brennan, head of investment management at AJ Bell, said like most statistics, "these can be used by the user to confirm their view".
"For a rules-based investor it confirms their belief that markets are efficient, and it is hard for an active manager to add value consistently," he explained.
"On the other hand, for those in the active management camp, it shows that although picking the winning managers may be hard, good managers do exist, especially in less certain areas."
However, Brennan said the percentage of active funds that have managed to survive over the last decade is "staggering", given most funds adopt a five-year investment time horizon on their factsheets or within their communication to investors.
"Not all funds will have disappeared altogether, with several of them merging into other funds," he said.
"However, as an investor in an active fund, the question perhaps shouldn't be ‘will this fund beat the benchmark', but rather ‘will it still exist in the long term?'"
Based on S&P's report, AJ Bell conducted further analysis on the actively-managed funds that have survived. It found that of the 640 funds that have a ten-year performance track record, the average assets under management was £725m. In contrast, the 1,056 funds with less than ten years under their belts were 30% smaller with an average AUM of £510m.
The firm's research also found that a fund's age typically correlated with the fees it charges, with the average fund with a ten-year track record charging almost 50% more than newer funds at an average management fee of 1.4%.
"This shows that despite being larger in size, a fund with a long, successful track record can charge a premium for its management, despite the fact they are operating larger funds on average," Brennan said. "Or, a less generous interpretation would be that older funds which have built a large investor base are sitting on their laurels, and letting inertia take its course.
"On the flipside of the coin, newer funds need to offer lower costs to be competitive against incumbents, and to compete against passive funds.
"These dynamics perhaps point to why there has not been as much of a squeeze on active fund management fees as many expected."