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WSJ Report - A New Roster of Top Stock-Fund Managers

MarkMark
in Fund Discussions
"Can’t anybody here play this game?

That quote from baseball legend Casey Stengel would apply to the job of stock-fund manager these days. Under the pressure of an uncertain stock market and banking system—and the Federal Reserve’s relentless interest-rate increases to try to tame inflation—it has been harder than ever for stock-picking fund managers to grind out gains.

A year ago, when managers closed the books at the end of the 2022 first quarter, scores of funds posted healthy gains, and all 10 that topped the list in The Wall Street Journal’s quarterly Winners’ Circle survey of outperforming funds delivered returns north of 20%. Flash forward to today, and the picture is different: The market is down for the 12 months, and of the 1,257 qualifying mutual funds in the survey, only 27 managed to eke out any kind of positive return, and only 10 posted a return north of 3%.

The average performance for the funds was minus 8.3%, trailing the S&P 500 index’s total return of minus 7.7%."

By: By Suzanne McGee Link

Comments

  • Sven
    edited April 2023
    Thank you. Large cap index is dominated by a handful of large tech companies (i.e. narrow breath) that make out-performing their respective index very challenging. When the leadership broadens out in the future, there will be more opportunities available to the stock picking in active managed funds.
  • msf
    @Sven, thanks for pointing that out You used an important phrase: "out-performing their respective index". The WSJ didn't compare all 1,257 "qualified" (over $50M AUM, 3 year record) actively managed domestic equity funds to their respective indexes, but compared them all to the S&P 500.

    Providing a quick bit of context, VFIAX returned -7.77% (April 2022 - March 2023), while its sibling VTSAX returned -8.78%. (Data from M*, 1 year performance as of last quarter.) Based on that figure it looks like active managers have acquitted themselves pretty well over the past 12 months.

    Of course, I'm fudging figures too, because I'm not looking at how many large cap vs. small and medium cap funds there are. For example, if 99% of funds were large cap, then we should indeed be comparing the average fund return to the S&P 500.

    The point is that the WSJ piece didn't look at any of this. It just went: oooh, look at how few funds made money last year. That would sound a lot different if it had been expressed as: isn't it a shame that only 27 actively managed funds managed to beat the S&P 500 by more than 7.7%?
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