Fund managers everywhere are getting crushed

It isn’t just high-profile hedge funds that have been getting crushed these past few months. Mutual funds have been getting hammered too.

According to a US equity strategy note out from JPMorgan, 67% of mutual funds underperformed their benchmark in the third quarter, with more than a third, or 34%, underperforming by at least 250 basis points, or 2.5%.

Those stats are based on a universe of more than 2,300 active funds with more than $US5.5 trillion in assets.

Active fund managers are judged based on their performance relative to the benchmark, making the pain in third quarter especially galling.

The note said: “The Sector positioning explains recent active manager underperformance. In 3Q mutual funds have been favouring Healthcare (+2.0% overweight) with their largest single overweight in Pharma/Biotech (+1.1%) while most underweight Staples (-2.0%). During the quarter, Healthcare significantly underperformed (-11%) while Staples faired much better (-0.9%).”

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