US Active/Passive Barometer

Morningstar

Research

44 Pages

Morningstar explores how active fund managers performed compared to their passive indexing peers across various categories. The authors suggest that despite active managers promising outperformance during volatile markets, these stock pickers consistently struggle. Surprisingly, randomly selecting an active manager carries a massive 60% probability of trailing behind basic index alternatives over time.

Key Takeaways

Active equity struggles: The overall US equity success rate for active managers rose marginally to just 36%.
Bond funds bounce back: Active bond strategies saw success rates jump by 22% following a terrible prior year.
Smart money flows: Asset weighted returns defeated equal weighted returns across 16 of 20 categories over 10 years.
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