A group of investors with $16 trillion at stake is struggling to find success, and its survival is in jeopardy
- Fewer equity mutual funds are succeeding at beating their benchmarks, according to Morningstar.
- They continue to be trounced by passive mutual funds and cheaper products designed to track an index.
- JPMorgan and Vanguard Group this week announced products that could put the active-management industry under even more strain.
Stock pickers have one overarching mandate: Deliver more returns than your benchmark index.
But fewer of them are achieving that, according to Morningstar's latest semiannual report on mutual funds, which dives into how active funds stack up against their passive peers.
The success rate - defined as beating a benchmark - among actively managed funds this year through June was 36%, down from 43% in 2017. A smaller share of funds found success year-on-year in 15 out of 19 categories compiled by Morningstar, with real-estate funds seeing the most success.
"Selecting winning active managers is very difficult," said Ben Johnson, the author of the report and Morningstar's director of global ETF and passive strategies research.
"Very few of them survive. Very few of them that wind up surviving also outperform their average passive peers over longer time horizons." One exception has been active foreign-stock funds. ...
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