As markets continue to favor the largest companies, the majority of actively managed funds are struggling to maintain their performance, according to the latest S&P Dow Jones Indices SPIVA global index map.

Across 56 categories of equity and fixed-income funds analyzed in the six-month period ending in June, the majority of funds underperformed in more than two-thirds of the categories reported. Of the 8,417 unique funds represented in the full half-year statistics, a similar 64 percent of individual funds underperformed their assigned benchmark.

This trend was most pronounced in global equity markets, where funds based in the US, Europe, Japan, Canada and Australia underperformed the global S&P index. The degree of underperformance in these markets ranges from 70 percent to 85 percent.

"Part of the disappointing performance of actively managed global equity funds can be attributed to the difficulty of outperforming the US component, with the majority ranging between 57% and 78% of funds focused on US equities in the US, Europe , Japan and Canada underperformed the S&P 500,” S&P said.

"There were also challenging headwinds in other developed equity markets, including major continental European Switzerland, France and Germany, where 76%, 85% and 88% of domestic active funds respectively underperformed," he adds.

However, some areas of outperformance have emerged, offering a glimmer of hope for active managers.

In the US, small-cap funds bucked the broader trend, with 85 percent of actively managed funds outperforming the S&P SmallCap 600.

The Middle East also saw continued strong performance, building on a successful 2023, with a similar percentage of funds outperforming the S&P Pan Arab Composite LargeMidCap Index.

In addition, active funds in markets such as South Africa and Mexico performed relatively well, with earnings ratios hovering around or above 50 percent.

The S&P also reported other bright spots in active performance, particularly in fixed income categories.

"On both sides of the Atlantic, bonds with lower credit and less liquidity generally performed better, and since both are often seen as sources of potential excess returns, it may not be surprising that US dollar-denominated and euro fixed income markets hosted some of the most fertile ground for actively managed funds,” it said.