Busting the Myth That Active Funds Do Better in Bear Markets
Investors should focus on the long-term signals, pick their spots, and keep a close eye on costs, based on analysis from Morningstar's midyear Active/Passive Barometer.
The coronavirus sell-off and subsequent rebound tested the narrative that active funds can navigate market volatility better than their index peers. The midyear installment of the Morningstar Active/Passive Barometer looks at active funds' performance through the first half of 2020 and shows that there's little merit to this notion. Morningstar Direct clients can download the full report.
Across the 20 Morningstar Categories examined in this latest report, 51% of active funds both survived and outperformed their average index peer during the first half of the year. Active funds' performance was neither categorically better nor worse than that of their index peers during this period.