Key insights
- Only 28% of mutual funds are outperforming the S&P 500, down from 60% in February. This is due to market gains being concentrated in a few AI-driven tech megacaps, making it difficult for diversified portfolios to keep pace. This trend suggests continued narrow market leadership and potential vulnerability if these leading stocks falter.
Active managers who briefly looked like they might finally have their moment earlier this year are once again confronting a familiar problem: a market rally driven by a tiny group of tech megacaps that diversified portfolios simply can’t keep up with.
The share of mutual funds outperforming the S&P 500 this year has plunged to just 28%, according to the latest data from Barclays Plc, down from over 60% at the end of February. After benefiting from a rotation out of high flying technology shares and into the broader market, stock pickers are getting left behind as money floods back into a narrow group of AI-fueled heavyweights.