Mutual funds run by stockpickers fall short in 2015, extend losing streak

11 Jan, 2016

The average US mutual fund run by stockpickers once again fell short in 2015, extending a six-year losing streak. In a year when rising interest rates and a slowing bull market were supposed to have helped active managers identify winners based on fundamentals, only 46 percent of the 3,232 actively managed equity funds tracked by Lipper outperformed their relative benchmark.
While that's an improvement from just 27 percent of funds that beat their benchmarks in 2014, the average fund run by stockpickers has not turned in a better performance than its benchmark since 2009, when 53 percent of active funds outperformed.
That long losing streak has been a boon for the exchange traded fund (ETF) industry, a class of mutual funds that passively track indexes. Total assets invested in ETFs have roughly doubled over the last 5 years to approximately $2 trillion, said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ. "The data has long poked holes in the merits of the average actively run stock fund outperforming. Now we are seeing shareholders vote with their feet and start to go to passive funds," he said.
Overall, passive index funds and ETFs brought in $255.3 billion for the year through November 2015, the most recent data available from Lipper. Active funds, meanwhile, saw investors pull out about $92.4 billion in assets over the same time.
Part of the poor showing by stock fund managers in 2015 came from a broad market decline that was offset by outsized gains among a handful of companies.
Of the 500 stocks on the benchmark S&P 500 index, 301 ended the year down 10 percent or more from their 52-week highs and 175 were off by at least 20 percent. Yet, the S&P 500 ended the year down just 0.7 percent, in large part due to the performance of Facebook Inc, Amazon.com Inc, Netflix Inc and Google parent Alphabet Inc, each of which surged more than 35 percent for the year and together comprise more than 5 percent of the weight of the index.

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