Active Managers Not Beating Indexes

According to an article in Bloomberg, “fewer stock pickers are beating their indexes, with value managers among the worst performers.”

The article cites a Morningstar report (that examined results of 4,500 active and passive U.S. mutual funds and ETFs) showing that just 36 percent of actively managed stock funds topped their indexes through June, down from 43 percent in 2017. It also reports that low-cost index funds have been “gaining market share for years as stock and bond pickers struggle to beat markets net of fees.”

The only category to beat indexes, according to the article, is managers of intermediate-term bond funds, with more than 70 percent outperforming their benchmarks through June. The Morningstar report states: “Active managers in the category have been rewarded handsomely for assuming credit risk as both investment-grade and below-investments-grade credits have enjoyed a sustained rally.”