S&P Global just published its semi-annual report on fund manager returns and the results must make stock-pickers cringe. For the year ending June 30th, 2016 a whopping 90.2 per cent of the actively-managed US mutual funds that invest in domestic equities were beaten by their benchmarks when the returns are calculated net of fees. Let’s remember, this last year was highly volatile with a market swoon last summer and a nasty start to this year. Stock-pickers tell us that they are meant to do better when markets are volatile. Well, guess what? They don’t.
International funds fared a bit better but the majority (over 75 per cent in all but the emerging market equity sector) also failed to beat their benchmark over the last year. No wonder Vanguard and the other passive index providers are winning the market share game….