- Active funds do outperform markets in some cases, but the success rate varies between specialisms and regions
- We look at which fund sectors have fared better, as well as the laggards
- Why some markets might be tougher for active than others – and what fund pickers should focus on
“Index tracking has failed UK stock market investors.” So thundered one of the Investors Chronicle’s more forthright recent headlines, and not without justification. The relevant article, authored by the IC’s Phil Oakley, laid bare just how discouraging recent history has been for the FTSE All-Share and the passive funds that track it.
Investors are more than familiar with the dismal recent performance of a market many now love to hate. A horrendous pandemic, the resulting swathe of dividend cuts and those ever-present Brexit concerns mean that even after several weeks of euphoric, vaccine-fuelled price gains, the FTSE All-Share is still sitting on a double-digit loss for 2020, as of late November. Yet the past two decades have done few favours for UK equity trackers, either. As the IC associate editor concedes, the FTSE All-Share has actually outstripped inflation over a 20-year stretch – but “only just”. Good UK stockpickers, by contrast, have shown that rich gains can still be made from such unloved markets, provided one is picky enough.