Data: Stock-Picking Funds Aren't Topping Indexes

Wall Street insists it's a stock picker's paradise, though the numbers say otherwise. Morningstar finds just 27% of actively managed large-cap stock funds beat their passive benchmarks in the 12 months through June. That was an improvement; the figure was 13% for the decade before that. Investors have noticed, the Wall Street Journal reports: Money has been leaving active US stock mutual funds every year since 2015, while low-cost index funds now hold nearly double the assets.

One obstacle is that mega-cap tech names dominate the S&P 500, making it hard for active managers—who generally avoid such concentration—to keep up. The exception is bonds, where two-thirds of core active funds topped their indexes over the past year, leading some strategists to argue investors should get cheap stock-market exposure via ETFs and save their "active budget" for fixed income.