FYI: (This is a follow-up article.)
A volatile stock market should be good for actively managed stock funds. Nimble stock pickers can avoid trouble spots, emphasizing defensive sectors when the market is falling. And by holding a bit of cash in their portfolios, they may be able to beat pure stock indexes such as the S&P 500.
But while volatility has picked up sharply this year, most active stock funds have fallen behind their benchmarks. More than 60% of active funds were beating their benchmarks in the first quarter. But the number outperforming has nearly halved since April, falling to 33% of large-cap core, growth, and value funds, according to a note from Goldman Sachs analyst Arjun Menon. That’s a sharp fall from 2017, when 45% of active funds outperformed, and it’s down from the long-term average of 37% over the past 10 years.