2020's Big Market Moves Catch Most Active Funds Flat-Footed
The coronavirus sell-off and subsequent rebound proved tough to navigate, especially for actively managed U.S. stock funds.
Just 49% of the nearly 3,500 active funds included in our analysis survived and outperformed their average passive counterpart in 2020. This number isn't far off from what it was when we assessed these funds in mid-2020, reinforcing the view we shared then: There's little merit to the notion that active funds are more capable of navigating market volatility.
We further analyze these findings in the year-end 2020 installment of the Morningstar Active/Passive Barometer, a semiannual report that measures the performance of U.S. active funds against passive peers in their respective Morningstar Categories. The Active/Passive Barometer spans nearly 4,400 unique active and passive funds that accounted for approximately $15.9 trillion in assets, or about 67% of the U.S. fund market, as of the end of 2020. Morningstar Direct clients can access the full report here.
Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.