Many believed this would be the year that active stock pickers and mutual fund managers could choose their battles to generate alpha. However, the majority of active managers continued to underperform benchmark indices, bolstering the case for passive index-based exchange traded funds.

Goldman Sachs analysis found that over the first two months of the year, only 28% of large-cap mutual fund managers beat their benchmarks and only 1% are showing positive gains, reports Jeff Cox for CNBC.

The underperformance stands in stark contrast to many Wall Street calls that rising volatility and dissipating correlation between assets would benefit active management.

“Despite the greater alpha return opportunities that come with higher dispersion, the market environment has been challenging for investors,” Goldman strategist David Kostin said.

Weighing on active funds, momentum stocks have been underperforming, notably the crowd favorite FANGs, or Facebook (NasdaqGS: FB), Apple (NasdaqGS: AAPL), Netflix (NasdaqGS: NFLX) and Google (NasdaqGS: GOOG).

Moreover, growth stocks lagged value and conservative plays this year.

Year-to-date, the iShares S&P 500 Growth ETF (NYSEArca: IVW) fell 5.0%, Vanguard S&P 500 Growth ETF (NYSEArca: VOOG) dipped 5.0% and SPDR S&P 500 Growth ETF (NYSEArca: SPYG) dropped 4.9%.

Meanwhile, value plays did not retreat as much as the growth category. Year-to-date, the iShares Russell 1000 Value ETF (NYSEArca: IWD) was down 4.5%, Vanguard Value ETF (NYSEArca: VTV) was 3.8% lower and iShares S&P 500 Value ETF (NYSEArca: IVE) declined 3.6%.

“The transition from Growth to Value is unusual given the increasing market focus on the possibility of a U.S. economic recession,” Kostin added. “Although our economists believe U.S. recession risk remains low, most client conversations this year have started with the topic, and asset markets seem to be pricing in a more pessimistic outcome than our forecast.”

Kostin attributes the greater volatility to de-risking, which weighed on high-growth stocks that made up most popular active fund positions.

Active mutual funds’ underperformance, coupled with the high fees, has caused investors to dump their holdings in favor of low-cost, passive index ETFs. Year-to-date, long-only equity mutual funds saw $38.1 billion in outflows while ETFs lost $17.6 billion.

Among the most popular stock ETF trades of the year, the iShares MSCI USA Minimum Volatility ETF (NYSEArca: USMV), which selects stocks based on variances and correlations, along with other risk factors, has attracted $2.4 billion in net inflows so far this year, according to USMV rose 0.3% year-to-date.

The Vanguard 500 Index (NYSEArca: VOO), which tracks the S&P 500 index and comes with a dirt cheap 0.05% expense ratio, saw $2.0 billion in inflows this year. VOO dipped 4.3% year-to-date.

The Utilities Select Sector SPDR (NYSEArca: XLU), which follows the utilities sector, has brought in $1.6 billion in new assets this year as investors turned to more conservative or defensive plays. XLU has gained 6.7% year-to-date.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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