Active funds caught ‘off guard,’ missing out on stock market's big rally in first quarter

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Actively-managed mutual funds in the U.S. weren’t ready for the stock-market’s "big rally" in the first quarter, according to BofA Global Research.

Actively-managed mutual funds in the U.S. weren’t ready for the stock-market’s “big rally” in the first quarter, according to BofA Global Research.

The rally “caught active funds off guard,” with just 33% of large-capitalization funds beating their Russell 1000 benchmarks in the first quarter, BofA equity and quant strategists led by Savita Subramanian said in an April 4 note. That was their “worst quarterly hit rate” since the fourth quarter of 2020, they said.

Macro systematic funds sank 6.7% in March for their worst monthly performance in more than five years, according to the note. These funds became the bottom-performing group among hedge funds this year, down 5.8%, after ranking as the top performers in 2022, BofA found.

 

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