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It Ain’t Easy Being ActiveIt Ain’t Easy Being Active

Only 36 percent of stock-picking managers survived or outperformed their average passive peer over the past 12 months, according to Morningstar data.

Samuel Steinberger, Senior Technology Editor

August 23, 2018

1 Min Read
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Active fund managers had a tough first half of the year, according to a Morningstar report. In the firm’s semiannual “Barometer” report, which eschews indexes and instead measures actively managed funds’ success against passive alternatives in the same categories, one-year success rates among active U.S. managers declined, compared to the their results from year-end 2017.

In fact, only 36 percent of stock-picking managers managed to compete with or outperform their average passive peer over a 12-month trailing period ending in June 2018. Last year that same figure was 43 percent.

Active fund managers in the intermediate-term bond category have been scoring wins, however. Although they also declined in their success rate over the past year, 70 percent of them survived the past 12 months and bested their average passive peer. They’ve found success in taking on credit risk, finding success even as far back as a 10-year trailing period, according to the report.

Actively managed U.S. and global real estate funds also saw some success, year-over-year. The U.S. real estate category had the highest 10-year survivorship rate among equities, at 69 percent, and it, along with global real estate, saw more success this year than last.

With the bull market extending into record territory, active managers are finding it hard to compete with index funds, partly because many active managers keep cash on hand for redemptions or opportunities. The resultant drag can weigh on performance, the report noted.

The report takes into account roughly 4,500 active and passive U.S. funds, representing about 79 percent of the U.S. fund market, according to Morningstar.

About the Author

Samuel Steinberger

Senior Technology Editor, WealthManagement.com

Samuel Steinberger is Senior Technology Editor for Informa Connect’s WealthManagement.com. In his role, Mr. Steinberger provides the publication’s wealth and financial technology coverage. 

Mr. Steinberger’s editorial insight and familiarity with technology accelerates Informa’s growth within the financial advisor and wealth management communities, providing in-depth news for advisors and financial professionals. 

Before joining Informa Connect, Mr. Steinberger produced documentaries with former CNN anchor Soledad O’Brien at Soledad O’Brien Productions (formerly Starfish Media Group). He specialized in research, shooting and editing, as well as finding distinct voices to explain topics like mental health, poverty and racial divide. 

Prior to joining Soledad O’Brien Productions, Mr. Steinberger managed multi-departmental technology projects for global legal technology leader Transperfect Legal Solutions. After obtaining his graduate degree in journalism from Columbia University, he completed his transition from technology management to media. 

Mr. Steinberger is an award-winning journalist, author and researcher who has written, edited and reported for a number of publications, including The New York Times, Financial PlanningAmerican Banker and PBS. He is founder of beverages publication Give Me Weird Drinks

Mr. Steinberger’s technology analysis and insight has been featured in several books on virtual and augmented reality. Mr. Steinberger has received awards and recognition for his reporting and research, including the American Business Media's prestigious Jesse H. Neal Award for editorial excellence.

Follow on Twitter: @slsteinberger

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