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The Active Stock Fund Slump Explained

Pre-fee returns are sliding, funds are performing more alike, and the 'wrong' styles are leading.

Active U.S. stock funds are succeeding less often than they used to. This likely reflects the impact of a few trends: 1) Funds are outperforming before fees less often and by smaller margins, on average; 2) Styles like size and value are performing more alike; and 3) The "wrong" styles (large-cap and growth) are leading.

Some of these trends should abate. For instance, the small-cap and value styles are likely to rebound. But others appear to be more structural; this argues for funds to reconsider their fees.

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