2025 was a challenging year for stock pickers due to market concentration in a few tech giants, leading to significant outflows from active mutual funds and a preference for passive investing. Despite some successful thematic and global diversification strategies, many investors struggled with the high costs of deviating from benchmarks, highlighting the ongoing dominance of a small group of stocks in driving market returns.
Large-value funds have seen significant outflows in 2023, with May marking the category's worst month of outflows ever. The outflows have affected both actively managed and index-tracking large-value funds, with roughly $36.3 billion exiting the $1.5 trillion category this year. The outflows coincide with a renewed spell of underperformance for value strategies, with the average large-value fund rising 3.9% through June 15, while the average growth fund returned 23.5%. Among the 10 large-value funds with the greatest outflows this year, seven are index funds.
