The Morningstar US Active/Passive Barometer for 2024 provides insightful data on how active funds have been performing compared to their passive counterparts. Over the past decade, active funds have faced challenges, marked by consistent outflows and difficulty in outperforming passive funds. However, the total assets in US passive mutual funds and ETFs exceeded those of active funds for the first time.
Despite these trends, active management is far from obsolete. Active managers have managed to compensate for outflows through strategies like asset appreciation and fee bases during lucrative market conditions. Yet, the changing market environment could pose challenges.
Key Findings from the Morningstar US Active/Passive Barometer:
Success Rates: In 2024, active small-cap managers had a higher success rate (43%) compared to mid-cap (37%) and large-cap (37%) managers. However, over the last decade, only 7% of active large-cap funds survived and outperformed their passive counterparts.
Challenges in Large-Cap Equity: Only 7% of active US large-cap funds managed to survive and outperform passive competitors over the past decade. However, there was an improvement in their performance in 2024, with a success rate increase to 37%.
Success in Small-Cap Categories:Active small-cap funds performed better over the long term, with a 43% success rate in 2024, suggesting that the market is less efficiently priced in this category.
Real Estate and Fixed Income: Actively managed US real estate funds displayed the highest success rate among all categories with 47% succeeding over the past decade. In fixed income, active bond managers saw increased success rates in 2024, particularly in intermediate core bonds, corporate bonds, and high-yield bonds.
Active management remains a viable option for certain categories, notably in real estate and fixed income markets. The Morningstar report provides a comprehensive analysis that aids financial advisors in understanding the dynamics of active versus passive fund performance.
The original article on Morningstar discusses these findings in detail, highlighting the importance of the Active/Passive Barometer as a tool for evaluating investment strategies, offering insights into fees, market dynamics, and success rates across various fund categories.
More Articles
Getting licensed or staying ahead in your career can be a journey—but it doesn’t have to be overwhelming. Grab your favorite coffee or tea, take a moment to relax, and browse through our articles. Whether you’re just starting out or renewing your expertise, we’ve got tips, insights, and advice to keep you moving forward. Here’s to your success—one sip and one step at a time!
Four of the largest Multiple Listing Services (MLSs) in the Southeast have recently formed an alliance, establishing a data sharing network aimed at increasing referral business among real estate agents. The Charleston Regional MLS in South Carolina, Canopy MLS in North Carolina, Georgia MLS, and Realtracs, the largest MLS in Alabama, Kentucky, and Tennessee, have come together to create the Southeast MLS Alliance. This strategic partnership will enable members of these four MLSs to access over 85,000 listings across Alabama, Georgia, Kentucky, North Carolina, Tennessee, and South Carolina, providing real estate agents with valuable data and expanding their referral opportunities throughout the Southeast.
The current state of the mortgage market has presented prospective homebuyers with a significant challenge – surging mortgage rates. These rates have reached a 20-year high, hovering around 7.7%, making it increasingly difficult for borrowers to secure affordable loans. As a result, borrowers are actively seeking support from their family members to overcome this hurdle. To combat the impact of surging mortgage rates, borrowers are turning to their parents for financial assistance. This can take the form of gifted funds or by having parents become non-occupant co-borrowers. By involving family members in the mortgage process, borrowers can increase their chances of securing loans and achieving their homeownership goals.
In a surprising turn of events, Inga Dow, a prominent Keller Williams franchisee and CEO of multiple Texas-based Keller Williams offices, has withdrawn her sexual misconduct lawsuit against the real estate giant. While Dow's claims against Keller Williams and its co-founder, Gary Keller, have been dropped, the lawsuit against former CEO John Davis remains ongoing. The outcome of this legal battle is still uncertain, and further details may emerge as the case progresses. Stay informed with Cameron Academy's online courses tailored to your needs and goals in the real estate industry.
The recent approval of Remote Online Notarization (RON) legislation in California is a significant development that Cameron Academy is thrilled to discuss. This progressive bill, signed into law by Governor Gavin Newsom, enables individuals to notarize their documents remotely using advanced audiovisual technology. The introduction of RON legislation in California brings about numerous advantages that revolutionize the notarization process. By embracing digital advancements, California is empowering individuals and businesses with enhanced convenience and accessibility, significant time and cost savings, improved security, and streamlined workflow.
"Even though mortgage origination volumes are down, we’re experiencing a highly competitive purchase market. That means a number of businesses, seeking to grow their revenue, will likely look to expand their reach to the default and REO space. However, venturing into this industry without proper knowledge and preparation can lead to serious consequences. By understanding the lessons learned from the past foreclosure wave and staying current with the changing environment, businesses can navigate the challenges and seize the opportunities presented by the default and REO market."
In the ongoing legal battle involving the National Association of Realtors (NAR), Keller Williams, and HomeServices of America, a recent development has emerged. The plaintiffs in the lawsuit, known as the Sitzer/Burnett plaintiffs, have filed a notice to withdraw three named plaintiffs. This move is seen by the defendants as an attempt to avoid cross-examination. The lawsuit, initially filed in April 2019, challenges NAR's Participation Rule, which requires listing agents to offer compensation to buyers' agents in order to list a property on a Realtor-affiliated multiple listing service (MLS). The plaintiffs argue that this commission sharing inflates costs for consumers, in violation of the Sherman Antitrust Act. With the trial scheduled to start on October 16, the potential damages in this suit are estimated to be up to $4 billion.
:quality(80)/cloudfront-us-east-1.images.arcpublishing.com/morningstar/GSRW3O6SIBE4NNTDL3KBGXHHYU.png "Morningstar Us Active/Passive Barometer For 2024 Reveals Trends In Fund Performance 2")
:quality(80)/cloudfront-us-east-1.images.arcpublishing.com/morningstar/FVUD4QYNQ5EIDCMVL5CBIE4NQE.png "Morningstar Us Active/Passive Barometer For 2024 Reveals Trends In Fund Performance 3")
:quality(80)/cloudfront-us-east-1.images.arcpublishing.com/morningstar/WWSWFEN4HRDQFMQAJQ2L6PNWLM.png "Morningstar Us Active/Passive Barometer For 2024 Reveals Trends In Fund Performance 4")
