Mainland investors are no strangers to the global debate surrounding the effectiveness of active investment management.
It seems that the stock pickers are increasingly losing out to the ETFs in China, with a Morningstar barometer released Wednesday indicating that actively managed investment funds are increasingly struggling to outperform passive ones.
According to them, only 58 percent managed to do so in 2023, representing a 5-percentage point decline from a year earlier.
Sectoral Differences
When it came to actively managed consumer sectors, only 27 percent managed to outperform passives on a one-year basis, although 46 percent did so on a five-year basis.
The health sector was appreciably different, with 67 percent of active managers outperforming passive on a 1-year basis and 93 percent on a five-year basis. Although that can be seen as a positive, the figures were still substantially lower than those in 2021.
Longer Term Perspective
The picture was largely the same for large blend funds, growth funds, and small or mid-cap ones, with a few interesting divergences.
On a 10-year basis, most, however, showed relatively resilient performance, with small and mid-cap funds managing to outperform passives 100 percent of the time.
