In S&P Dow Jones Indices’ most-recent annual report of active managers’ relative performance against their benchmarks, 2018 was a continuation of the same theme that has prevailed for much of the past decade: active managers struggled to beat their passive counterparts1. This included the fourth quarter when the S&P 500 fell over 13%. Many investors assumed active managers would shine during the long-awaited risk-off environment and were surprised when this didn’t play out accordingly.
“What’s different about 2018 was the fourth quarter volatility,” Aye M. Soe, a managing director at S&P and one of the authors of the report, told CNBC. “Active managers claimed that they would outperform during volatility, and it didn’t happen.”2