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ETF Specialist

2020's Big Market Moves Catch Most Active Funds Flat-Footed

The coronavirus sell-off and subsequent rebound proved tough to navigate, especially for actively managed U.S. stock funds.

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Just 49% of the nearly 3,500 active funds included in our analysis survived and outperformed their average passive counterpart in 2020. This number isn't far off from what it was when we assessed these funds in mid-2020, reinforcing the view we shared then: There's little merit to the notion that active funds are more capable of navigating market volatility.

We further analyze these findings in the year-end 2020 installment of the Morningstar Active/Passive Barometer, a semiannual report that measures the performance of U.S. active funds against passive peers in their respective Morningstar Categories. The Active/Passive Barometer spans nearly 4,400 unique active and passive funds that accounted for approximately $15.9 trillion in assets, or about 67% of the U.S. fund market, as of the end of 2020. Morningstar Direct clients can access the full report here.

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Ben Johnson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.