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Expand chart
Data: Bank of America-Merrill Lynch; Chart: Axios Visuals

Less than half of actively managed funds are beating their benchmarks this year, but that's the second-best rate since the financial crisis, according to data from Bank of America-Merrill Lynch.

Why it matters: Stock pickers have performed much better against their respective Russell indexes the last few years than they had in the years immediately following the crisis. However, they've had significantly less money to invest and less competition.

  • In 2018, mutual funds saw the highest yearly outflows on record, and Moody's expects passive investing vehicles to hold more assets than actively managed funds by 2021.
  • Around 15% of ownable shares of S&P 500 companies are now held by passively managed funds, BAML's data shows.
  • Currently, 44% of funds in the U.S. are passively managed, vs. 56% actively managed, but the passive share has more than doubled since 2009.

Some good news for active managers: "Stock-picking is making a comeback," notes Savita Subramanian, BAML's equity and quantitative strategist. "For the first time post-crisis, stocks are now more differentiated (less correlated with each other) than sectors are with one another, suggesting picking stocks matters more than picking sectors."

  • "Persistently better performance may help stem outflows from active."

Go deeper: Investors tire of hedge funds, but keep them for the downturn

Go deeper

2 hours ago - Politics & Policy

Manchin's massive means test

Illustration: Aïda Amer/Axios

Sen. Joe Manchin (D-W.Va.) is offering progressives a trade: He'll vote for their cherished social programs if they accept strict income caps for the recipients, people familiar with the matter tell Axios.

Why it matters: Manchin’s plan to use so-called means-testing for everything from paid family medical leave to elder and disabled care would drastically shrink the size and scope of the programs. It also would bring a key moderate vote to the progressive cause.

The China whisperer

Nick Burns. Photo: Chen Mengtong/China News Service via Getty Images

President Biden's nominee for ambassador to China will face aggressive questioning Wednesday about the most important, and potentially perilous, bilateral relationship in the world.

Why it matters: While Nick Burns is an experienced diplomat with support on both sides of the aisle, lawmakers want to use his confirmation hearing to force the administration into some tough positions on China.

Jan. 6 committee recommends contempt charges against Bannon

Steve Bannon. Photo: Stephanie Keith/Getty Images

The House select committee investigating the deadly Jan. 6 Capitol riots unanimously approved a resolution Tuesday night recommending that former Trump aide Steve Bannon be held in contempt of Congress for refusing to comply with a subpoena.

Why it matters: The resolution sets up a House vote to refer Bannon for potential criminal prosecution, signaling that the committee will not tolerate attempts by former President Trump and his associates to stymie the investigation.