Stock Pickers’ Very Bad Year
2016-08-20
After taking some big hits, active managers may be about to give some licks back.
Beating the market has always been hard for the pros. Lately it has been even harder. In the decade that ended in 2015, an average of just 37% of large-cap mutual funds outperformed the Russell 1000 in any given year, according to Bank of America Merrill Lynch. In the first seven months of this year, only 14% outpaced the benchmark.
Costs are part of it, but there are other problems. The number of Americans who own individual stocks has steadily declined since the 1990s, leaving fund managers with fewer patsies at the poker table to take chips away from. The crush of cash entering index funds has made stock selection less effective.