Bank of America: Less Than Half of Active Funds Beat Benchmarks in April

Bank of America data show that 43% of active funds worldwide outperformed their benchmarks in April, with a median relative return of -0.43%. Global equities rose 10.0% in the month, driven by rotation into higher-risk stocks. Performance varied by style and region, with growth strategies and Asia Pacific ex-Japan managers faring relatively better than value and yield strategies.

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Key Points

Only 43% of active funds worldwide outperformed benchmarks in April; median relative return was -0.43%.
Growth funds outperformed other styles with 48% beating benchmarks and a median of -0.09%, while value funds had only 28% outperform and a median of -1.56%.
Asia Pacific ex-Japan funds posted the strongest regional results with 55% outperforming and a median relative return of +0.17%.

Bank of America found that just 43% of active funds around the world topped their respective benchmarks in April, and the median relative return across funds was -0.43%. During the month, global equities rallied 10.0%, accompanied by a material rotation toward higher-risk stocks.

Performance differed markedly by investment style. Growth funds recorded the strongest showing, with 48% of funds outperforming and a median relative return of -0.09%. By contrast, value funds posted one of their weakest results in recent memory: only 28% of value managers outperformed and the median relative return was -1.56%, marking the third-worst month for value in 13 years. Yield-focused strategies saw 25% of funds outperform with a median relative return of -1.80%.

Funds characterized by particularly high active positions also struggled. Managers with an Active Share Ratio in the 80-100 range had just 30% of funds outperforming and a median relative return of -1.78%.

Regional differences were notable. Asia Pacific ex-Japan funds led the pack in April, with 55% beating their benchmarks and a median relative return of +0.17%. Bank of America notes that these managers are most overweight Taiwan and Korea while remaining underweight Australia.

The report lists the largest overweight and underweight holdings for Asia Pacific ex-Japan funds. Their largest overweight positions include ICICI Bank, AIA, HDFC Bank, MediaTek, Eternal, State Bank of India, and Midea Group. The largest underweights among these funds are TSMC, Reliance Industries, Tencent, Alibaba, Xiaomi, Bank of China, and CBA.

High Active Share Ratio funds in the 80-100 band show a distinct positioning profile as well. Their largest overweight positions include AIA, HDFC Bank, Edenred, Techtronic, Kinsale, Bank Central Asia, and RBC Bearings. On the flip side, their largest underweights are Apple (NASDAQ:AAPL), NVIDIA (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), Amazon (NASDAQ:AMZN), Broadcom (NASDAQ:AVGO), Alphabet, HSBC plc, Meta (NASDAQ:META), and Berkshire Hathaway.

Implications for markets and managers

The data indicate that, despite a broad market rebound, active managers did not uniformly capture the rally relative to their benchmarks. Style and regional positioning appear to have been central drivers of relative outcomes in April.

Risks

Active managers with high Active Share ratios underperformed overall - 30% outperformed with a median relative return of -1.78% - suggesting concentration risk for high-conviction strategies.
Value and yield strategies lagged in April - value funds had their third-worst month in 13 years and yield funds had a median relative return of -1.80% - posing performance risk for income and value-focused allocations.
Regional exposure differences created dispersion - managers overweight in Taiwan and Korea and underweight Australia drove outperformance for Asia Pacific ex-Japan funds, indicating country-weighting risk for regional mandates.

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Bank of America: Less Than Half of Active Funds Beat Benchmarks in April

Key Points

Risks

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