Actively Managed Funds Mostly Failing to Beat S&P 500

Actively Managed Funds Mostly Failing to Beat S&P 500

Large cap active funds narrow gap with index in first half of 2022.

Reviewed by: Heather Bell
Edited by: Heather Bell

Actively managed U.S. large cap stock funds failed by a slender margin to surpass the S&P 500 index in the first half of the year. 

The S&P 500, which is having its worst year since 2008, beat 51% of actively managed large cap funds (those investing in companies with $10 billion or more of market capitalization), S&P Global reported in its SPIVA midyear survey. S&P Global said the big active funds are “on track for their best (i.e., lowest) underperformance rate since 2009.” 



As stock and bond indexes tanked this year, actively managed funds should have done better, the report suggests. While “market downturns putatively offer abundant hunting grounds for active managers,” the report stated, “opportunities for embarrassment were just as plentiful.” 

The report said that managers’ underperformance was highest in categories that had tanked the most. “All of the conditions that were supposed to offer fertile grounds for active managers, we had them in the first half of 2022. And yet 51% of actively managed funds underperformed,” Tim Edwards, S&P managing director and global head of index investment strategy, said in an interview. 

“The degree to which winners won, and losers lost was much magnified compared to normal market conditions,” he added.  

Beyond Large Caps 

In perhaps a further validation of John Bogle’s promotion of index investing over active, active managers’ performances worsened as market cap decreased. Fifty-four percent of midcap active managers and 63% of small cap active managers underperformed their respective benchmarks, the S&P MidCap 400 and the S&P SmallCap 600 indexes. This also counters some conventional thinking about outperforming the indexes being easier among smaller companies. 

While only 33% of midcap core funds underperformed, that was an outlier for domestic equities. Growth categories were hit the hardest as the market regime shifted to favor value. Eighty-nine percent of midcap growth managers underperformed during the first half, while large cap and small cap managers fared little better, with 79% and 84% underperforming their benchmarks, respectively. 

International funds demonstrated similar underperformance. International small cap managers did the best, with an underperformance rate of just 57%. At the international level, 68% of managers underperformed, for example, while 74% of emerging market fund managers underperformed.  

The news was a bit better for fixed income categories. Ninety-three percent of so-called core-plus-bond funds actually outperformed their benchmarks. However, at the other end of the spectrum, the worst-performing categories, U.S. government and municipal debt, saw 89% and 86% of its managers underperform, respectively.  


Contact Heather Bell at [email protected] 

Heather Bell is a former managing editor of She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.