AJ Bell: Active equity funds gain ground on trackers in first half of 2023
Laith Khalaf (pictured), is the head of investment analysis at AJ Bell
Active equity fund managers saw a substantial improvement in performance in the first six months of this year, with 44% outperforming a passive alternative, up from 27% in 2022.
However, the active versus passive battle continues to be overwhelmingly won by tracker funds over the long-term. The report found that over the last ten years, only 38% of active managers have beaten a passive comparator.
Moreover, the popular global sector continues to disappoint, with only a third of global active funds managing to beat a passive competitor in the first half of 2023. Over a ten-year period, only 22% of active funds have outperformed trackers.
Seven in ten active managers lose to passives in 2022
However, Laith Khalaf, head of investment analysis at AJ Bell, said there are long-running market trends which «provide some mitigation» for active managers, in particular the dominance of US tech stocks.
«There are now a cluster of large technology companies which make up a larger proportion of the global stock market than entire European stock exchanges that have been around for centuries,» he said.
According to AJ Bell, Apple and Microsoft now individually matter more to global stock market performance than the entire UK stock market.
The report also found a marked improvement in the performance of UK equity funds relative to passives.
Almost half (49%) of UK equity funds beat the passive machines in the first half of this year, considerably higher than the 13% who outperformed in 2022.
Meanwhile, three quarters (77%) of managers in the Global Emerging Markets sector have beaten the passive machines so far in 2023.
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