US active managers enjoy rare winning streak against benchmarks

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Sector positioning and style funds have helped US large-cap active managers enjoy a rare winning streak with over half beating the benchmark in H1, according to Bank of America Merrill Lynch.

It’s the first time the majority of active managers have beaten their benchmarks over a half yearly period since BAML records began in 2009.

Fifty-four per cent of large-cap managers bet the benchmark in H1, while small- and mid-cap manager outperformance was 42 per cent and 40 per cent respectively.

Overweights in technology, consumer discretionary and health care delivered the outperformance for large-cap managers, BAML argues.

Managers have also have record low underweights in staples, utilities, and telecoms, all of which have underperformed so far this year.

Among value managers 71 per cent outperformed and for growth funds it was 64 per cent, leaving core managers with just 36 per cent outperformance.

In the second quarter, 60 per cent of large-cap managers outperformed their benchmarks, the highest hit rate since 1Q 2009, and one of only six quarters in which over half of fund managers outperformed their benchmarks.

While large-caps delivered the best outperformance in H1, mid-caps enjoyed a strong June with 71 per cent outperforming.

In contrast to the style funds that delivered outperformance for large-cap funds throughout the year, core funds had the highest hit rate in June with 77 per cent beating the index. However, for the first half, core mid-cap funds’ outperformance has been just 18 per cent.

Among small-cap core funds the proportion of managers outperforming was even lower at 12 per cent.