Why are so many active fund managers underperforming?

Every six months at AJ Bell, we publish a report on the proportion of active managers beating the typical passive fund in seven key equity sectors. It's called Manager versus Machine, and ever since we launched the report in 2021, it has made challenging reading for active managers. In the latest edition, our analysis showed that overall, just 33% of active equity funds outperformed the typical index tracker in their sector (see table below). That doesn't sound like a good result, and it isn't. But it's probably better than you think. All active managers aim to outperform, and all inv...