Active mutual funds promise to generate greater alpha, but investors may be better off with index-based exchange traded funds as many active strategies fall short.

According to S&P Capital IQ Fund Research, 80% of running large-cap mutual funds have underperformed the S&P 500 in 2014, reports Jeff Fox for CNBC. [Active Strategies Continue to Lag Passive Index ETFs]

Concerned about the pricier valuations as broad equities keep hitting new record highs, many active managers have gone on the defensive and hedged against a potential correction.

Todd Schoenberger, president of J. Streicher Asset Management, argues that active funds are doing their jobs by allocating more prudently to diminish risk in an aging market rally.

“We’ve gone 35 months without a decline of 10 percent or more, and the median since World War II is 12 months,” Sam Stovall, S&P’s chief equity strategist, said in the article. “Everybody seems to be waiting for that all-elusive correction, when everyone will pile in. But if everybody’s waiting for it, it won’t happen.”

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