Mid-Year 2024 Highlights
In an environment characterized by mega-cap outperformance and the associated rise of market concentration, with the S&P 500® Top 50 outperforming the S&P 500 by 5% in the twelve months through September 2024, active managers may find it difficult to keep up with market-capitalization weightings. Despite these headwinds, active equity performance was mixed across the cap spectrum in the first six months of the year. In our largest and most closely watched comparison, 57% of all active large-cap U.S. equity managers underperformed the S&P 500, a relatively better-than-expected result, consistent with the 60% underperformance rate observed in 2023. Meanwhile, only 15% of all active small-cap U.S. equity managers underperformed the S&P SmallCap 600®, perhaps benefiting by tilting toward outperforming large-cap exposures. Mid-cap managers performed worse than their large- and small-cap peers, with 71% of mid-cap funds underperforming the S&P MidCap 400®.
Fixed income managers generally fared better in an environment of tightening credit spreads and plentiful opportunities to seek riskier credit exposures, with the iBoxx $ Liquid High Yield outperforming the iBoxx $ Liquid Investment Grade by 3% in H1 2024. 80% of General Investment-Grade funds and 61% of High Yield funds outperformed their respective benchmarks. Government bond categories faced a tougher time, with 75% of General Government funds underperforming the iBoxx $ Domestic Sovereign & Sub-Sovereigns.
