Only 23% of all active funds topped the average of their passive rivals over the 10-year period ended June 2019.
On Thursday, Morningstar released its semiannual analysis of active funds compared to passively-managed peers. The picture is not pretty for anyone trying to beat the market, especially when combined with the additional challenges of picking the right active manager and paying their fees.
“The big picture takeaway is that active management is a really difficult game and finding good active managers is more difficult still,” said Ben Johnson, Morningstar’s global director of passive strategies research. First, there are clear patterns on when it makes sense to hunt for – and pay for – active managers. Those include stocks outside of the US and fixed income. For example, over the past 10 years, only 8% of active U.S. large blend funds outperformed the average passive equivalent, while 82.4% of foreign small-mid blend, and 61.5% of corporate bond funds did.
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