SPIVA Report: Active Managers Struggle as Market Breadth Expands

According to the latest SPIVA U.S. Scorecard report, active fund managers continued to struggle against benchmark efficiency during the first half of the year, despite an environment characterized by expanding market breadth. The S&P 500 gained 10% through June 30 following strong corporate earnings, while mid-cap and small-cap stocks surged even higher, with the S&P MidCap 400 and S&P SmallCap 600 advancing 17% and 24%, respectively. Despite the favorable backdrop for stock pickers, 67% of domestic active large-cap managers underperformed the S&P 500. Mid- and small-cap managers experienced even higher failure rates, with 74% of midcap and 69% of small-cap funds lagging their respective benchmarks due to benchmark efficiency and fee drag. Conversely, international equities and fixed income offered bright spots for active management. Emerging markets and international small-cap active funds saw outperformance, with only 38% and 35% underperforming their benchmarks, while fixed income active managers averaged a 38% underperformance rate across categories.