The majority - 52.5% - of actively managed large-cap mutual funds outperformed the S&P 500 in the first half of the year, while most small-cap and midcap funds underperformed their respective S&P indexes, according to a Standard & Poor's report. Roughly 80% of active midcap funds lagged the S&P MidCap 400 index, and 73% of active small-cap funds were beaten by the S&P SmallCap 600.
"Many of the large-cap funds were overweight in the energy and utility sectors, as well as real estate investment trusts, which largely drove their outperformance," said Roseanne Pane, S&P mutual fund strategist. Energy stocks returned roughly 20% in the first half of 2005; utilities, 15%; and REITs, 6%. Cash holdings also contributed. Many of the midcap and small-cap funds were weighted toward the financial and materials sectors, which underperformed the indexes, she said.
Over the last three years, the S&P 500 has outperformed 74.5% of large-cap funds, the S&P MidCap 400 has outperformed 79.1% of midcap funds and the S&P SmallCap 600 has outperformed 76.8% of small-cap funds, according S&P.