Less than half of active funds outperformed comparable passive products during the first six months of 2026, according to AJ Bell’s latest Manager versus Machine report.
The study found that 42% of active funds beat passive alternatives between January and June, unchanged from the same period in 2025. Over a 10-year period, the proportion fell to 21%, the lowest level recorded since the report was launched in 2021.
Global equity funds recorded one of their weakest periods in the study. Just 22% of active global funds outperformed passive counterparts during the first half of the year. According to AJ Bell, this was the second-lowest result for the sector since the report began.
Dan Coatsworth, head of markets at AJ Bell, said: “Only 42% of active funds outperformed in the first half of 2026, matching the same reading from a year earlier.”
The report notes that global indices remain heavily concentrated in a small number of companies. AJ Bell highlighted that the MSCI World Index contains 1,283 constituents, with its 10 largest holdings accounting for 25.7% of the benchmark.
Performance varied significantly across regions.
Asia Pacific ex-Japan funds delivered the strongest results for active managers, with 65% outperforming passive alternatives.
Global emerging markets also recorded relatively high levels of outperformance, with 63% of active funds beating comparable passive products.
AJ Bell said both regions benefited from investor interest in companies linked to artificial intelligence infrastructure spending, including semiconductor manufacturers in Taiwan and South Korea.
Elsewhere, results were less favourable for active managers. In the UK, 19% of active funds outperformed passive rivals, while Europe ex-UK recorded a figure of 32%. In North America, 42% of active funds outperformed.
The report also examined investor fund-buying behaviour on AJ Bell’s DIY platform. Passive products accounted for 69 of the 100 most popular funds based on net purchases during the first half of 2026. A year earlier, the figure stood at 60.
At the same time, actively managed funds made up 85 of the 100 products experiencing the largest net sales.
Looking beyond the latest six-month period, the report found that 17% of active managers outperformed passive alternatives over five years, rising to 21% over 10 years.
Despite the broader findings, some sectors continued to produce stronger results for stock pickers.
Emerging markets funds recorded 63% outperformance over the first half of 2026 and 62% over a 10-year period, while Asia Pacific ex-Japan funds achieved 65% outperformance during the latest six months.
Commenting on the longer-term figures, Coatsworth said: “The picture is murkier on a longer-term basis, with a mere 21% outperforming over the past 10 years, the lowest figure since the AJ Bell Manager versus Machine report began.”
The report also found that actively managed funds attracted positive retail inflows during 2026, citing Investment Association data showing £2.5 billion of net retail sales in the first five months of the year.
However, passive products continued to account for the majority of the most popular fund purchases on AJ Bell’s platform.
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