Active managers are on a winning streak so far this year, with almost 70% of the 2,850 actively managed U.S. stock mutual funds beating the S&P 500 Index. By comparison, just 15% of U.S. large-cap stock pickers beat the market last year, according to S&P’s latest SPIVA report. On average, roughly 35% of managers have outpaced the S&P 500 in any calendar year, based on annual results going back to 2007.
Nir Kaissar from Bloomberg writes that this year’s results aren’t surprising. After all, most active fund managers tend to invest in a wide array of stocks across the market, from tech firms to banks and manufacturers.
Until recently, tech stocks were the best performers for years, which saw their value relative to other stocks soar, giving them a larger slice of indexes like the S&P 500 that weight stocks by size. When tech was hot, it was impossible for a well-rounded portfolio to keep up. Now, the opposite is true: with tech stocks on the decline, broadly diversified portfolios have the advantage.
“Active managers have the opportunity to sort through the broader universe to spot lesser-known companies outside of technology but also can use the recent market volatility to their advantage,” said VettaFi head of research Todd Rosenbluth.
Legacy mutual fund managers like JPMorgan Asset Management, Fidelity, and Capital Group looking to enter the exchange-traded fund space are realizing that to compete with the likes of BlackRock, Vanguard, and State Street Global Advisors, they’re going to need to offer active strategies.
“While diversified stock picking historically had been mostly available to advisors through mutual funds, in recent years many asset managers have launched active ETFs to provide advisors with a choice,” Rosenbluth added.
T. Rowe Price offers a suite of actively managed ETFs. T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.
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