What You Need to Know
- More than half of active U.S. equity funds underperformed their indexes in the year ended June 30.
- Small-cap and mid-cap active funds had more disappointing performance than large-cap funds.
- Value funds bested growth funds in absolute returns.
The hoped-for revival of actively managed mutual fund performance has disappointed once again.
For the year ended June 30, roughly 58% of active large-cap equity mutual funds underperformed the index, according to S&P Dow Jones Indices, publisher of the SPIVA (S&P Indices Versus Active) Scorecard.
Actively managed small- and mid-cap funds performed even worse than their large-cap counterparts. Seventy-eight percent of of active small-cap funds and 75.5% of active mid-cap funds underperformed their respective indexes — the S&P SmallCap 600 and the S&P MidCap 400.
This represents a reverse of the pattern that prevailed for the year ended June 30, 2020, and for calendar years 2020 and 2019. In all those periods, a substantially larger percentage of actively managed large-cap funds underperformed their benchmark indexes than small-cap and mid-cap funds, as the chart below shows.
For example, in calendar year 2020, 46% of active small-cap funds and 51% of mid-cap funds underperformed their benchmarks compared with 60% of large-cap funds.