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Investing Specialists

Ultimate Stock-Pickers: Top Holdings of Top-Performing Managers

Our Ultimate Stock-Pickers Index continues to beat the market even as relatively few of our top managers are outperforming the S&P 500.

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By Greggory Warren, CFA | Senior Stock Analyst

Outperforming the markets on a consistent basis continues to be a challenge for most active equity managers, and our Ultimate Stock-Pickers have certainly been more adherents than exceptions to this rule in the past couple of years. The lack of consistent outperformance on the part of active managers has been documented by S&P Dow Jones Indices in their quarterly and annual S&P Indices Versus Active Funds (SPIVA) U.S. Scorecard. In particular, the index group noted that at the end of last year just 41.3% of active large-cap fund managers on average had outperformed their benchmarks during the past 10 calendar years. Even in a good year for the markets like 2013, when a 32.4% gain in the S&P 500 TR Index should have lifted the performance of all fund managers, only 44.2% of U.S.-based large-cap funds outperformed their benchmarks. Data through the first two quarters of 2014 (the latest period for which we have information), was not much better with just 40.2% of large-cap managers beating the S&P 500 on a one-year basis. The results were even weaker when looking at large-cap funds on a three- and five-year basis, with 15.1% and 13.1%, respectively, outperforming the benchmark.

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.