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Almost half of actively managed large-cap US equity mutual funds managed to beat their benchmarks in the first two months of this year, representing a significant improvement from 2016 and a positive sign for managers who have struggled to compete with passive funds.

The beat rate has clocked in at 49 per cent on a year-to-date basis, up from 19 per cent in the whole of 2016, according to an analysis by Goldman Sachs of 407 funds with $1.3tn in assets under management.

The brightening performance highlights a shift in the US equities market that has begun to benefit stock pickers.

The S&P 500 has not posted a gain or loss of greater than 1 per cent on a closing basis so far this year, the first time this has occurred since 1966, research from JPMorgan Asset Management shows.

However, the overall tranquility obscures the rising volatility for individual stocks: stock-to-stock correlation has dropped to its lowest level since the late 1990s.

There are early indications that investors have begun to take notice of the improvement in performance. Outflows from large-cap funds have come in at $12bn in the first seven weeks of 2017, or $85bn on an annualised basis, Goldman’s data show. If the trend held, it would mark a slowdown from the $130bn that was pulled from large-cap funds in 2016.

Copyright The Financial Times Limited 2017. All rights reserved.
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