Top 10 Holdings of Our Ultimate Stock-Pickers' Index
Large-cap value strategies shine after equity market shock in late 2018.
Every fund investor would like to see the manager of the actively managed funds that they own beat the market every year, but they've been left wanting for well over a decade. The lack of consistent outperformance on the part of large-cap active managers (the main contributors to the Ultimate Stock-Pickers concept) has been well documented by the S&P Indices Versus Active Funds (SPIVA) U.S. Scorecard. For the five-year period ending in December 2018, the index group noted that 82.14% of large-cap managers have lagged the S&P 500. The results over this five-year period have been similar across all investing styles. A paltry 7.65% of large-cap core managers have outperformed their index over the past five years versus 20.92% of large-cap value managers and 12.5% of large-cap growth managers outperforming their respective benchmarks over the same time period.
While five-year results have been poor for active management, there are some recent bright spots, particularly in large-cap value. Large-cap growth funds underperformed their index during the second half of 2018, which included a massive sell-off in December and November. Morningstar's own large-cap core (5.48%), large-cap growth (6.07%), and large-cap value (6.12%) one-year index returns (as of June 15, 2019) reveal that value stocks are starting to pick up to carry momentum into 2019 as active management outperformed the S&P 500 Value index.
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.