Most fund managers fail to beat FTSE 100

THE vast majority of UK fund managers have failed to beat the British stock market this year, with only around one in 10 outperforming the FTSE 100.

Only 12pc of fund managers picking British stocks have managed to beat London’s benchmark index in the first half of this year, according to the broker AJ Bell. The FTSE 100 lost 3pc of its value over the period.

By contrast, 40pc of stock pickers in the US have beaten the market so far this year.

Overall, fewer than a third of active funds have outperformed any global passive tracker so far in 2022. They have fared worse than last year, when 34pc of managers beat the market.

The worst show was in the British stock market, where actively managed funds have lost 14pc of their value on average, compared with a 4pc drop in the average passive fund that simply tracks a basket of stocks. In the past six months, the best-performing active fund in the sector was the £50m Crux UK Core fund, which has grown by 5pc, according to the data provider FE Fundinfo. The worst was the £140m SVM UK Growth fund, which has lost 20pc.

The highest proportion of fund managers who succeeded in beating their passive alternative was in the global sector, but even here it was less than half at 49pc. Over the long term active funds have fared better, with 45pc outperforming a passive alternative over the past decade.

Laith Khalaf, of AJ Bell, said: “While the statistics suggest picking an active fund that outperforms over the long term is no better than a coin toss, investors can tilt the odds in their favour.

“They can split their own portfolios between fund managers and passive machines, based on where they see the biggest rewards from active management and indeed the most compelling performance prospects from specific managers.”