The hoped-for rebound in actively managed funds has once again failed to materialize. According to Morningstar’s latest Active/Passive Barometer, just 36% of active U.S. equity funds survived and outperformed their average passive peers over the 12 months through June 2018. That’s less than the 43% that did so over the same period last year.
Value equity funds fared the worst. While more than half of small-, mid- and large-cap value funds beat their passive counterparts over the 12 months through June 2017, less than 35% of large-cap value funds and less than 30% of small- and mid-cap value funds did so this year.
This “success rate,” as Morningstar calls it, fell the most for mid- and small-cap value stock funds — 27 percentage points — and 23 percentage points for large-cap value funds.
Actively managed growth stock funds also performed worse this year compared to last with the exception of large-cap growth funds. Forty-four percent beat their passive peers over the 12 months ended mid-year compared to just over 42% last year.
Actively managed intermediate bond funds also were an exception, but compared to stock funds, not to their own past performance. Almost 71% of actively managed intermediate bonds funds outperformed their passive counterparts over the 12 months ended June 30, but a year ago 85% of them did.
(Related: Identify the Best Active Equity Funds)
Altogether 15 of the 19 categories tracked by Morningstar showed lower success rates for actively managed funds versus their passive counterparts.