The people who manage your retirement fund are doing a horrendous job this year

It's been a rough year for mutual funds.

Goldman Sachs' equity strategists on Wednesday published an in-depth look into the year-to-date performance of 435 mutual funds that collectively oversee $1.5 trillion in assets.

Even after a stock-market rebound to all-time highs in the third quarter, most mutual funds, which manage various pools of money from 401K plans to college endowments, still lag their benchmarks.

Only 16% of large-cap mutual funds are outperforming their benchmarks year-to-date, Chief US Equity Strategist David Kostin and his team found.

That's below the 10-year average of 37%.

Just 9% of large-cap growth funds are outperforming the Russell 1000 Growth Index, versus the 10-year average of 39%, Kostin said.

Admittedly, nine months of 2016 is a very short time horizon to judge mutual funds on. But Goldman's note shows that the main reason for this underperformance has been managers investing in sectors that underperformed the market, and shying away from those that did well this year.

Sectors that were most favored, like financial services, have seen the worst underperformance relative to the market.

However, strong sectors like utilities and telecoms - so-called "bond proxies" because of their reliable returns - were among the least loved by big-money managers.

The utilities sector is the biggest year-to-date outperformer on the S&P 500, and has gained 17% this year. The S&P 500 is up almost 6%.

The chart below shows that the stocks which mutual funds are overweight have underperformed those they are underweight relative to the S&P 500.

This same misstep by fund managers can be seen at the individual stock level.

Small-cap mutual funds increased their holdings of J2 Global, a tech and media company, by the most for any stock, Goldman said. J2 Global shares have fallen 19% this year.

And, the funds decreased their position in homebuilder Cavco Industries by the most; its shares are up 14% year-to-date.

Kostin wrote that investors have preferred domestic Exchange-Traded Funds (ETFs) over international ones in the past few months amid the uncertainty around China and the UK referendum. But that could soon change.

"We expect rising political uncertainty in the US and a more stable environment in China and Europe compared with 1H 2016 will tilt investor preference towards international equity funds vs. domestic during the remainder of 2016," Kostin wrote.