Less Than 10% Of Actively Managed Equity Funds Managed To Beat The S&P 500

Chances are less than one in 10 an investor picked an equity fund that beat the S&P 500 Index in the five-year period ending August 31.

According to a Bloomberg report, only 9.5 percent of actively managed large-cap domestic equity funds outperformed the index over the five-year period, which helps explain why investors are pulling billions of dollars from funds.

Around 3,000 actively run funds that failed to beat the benchmark index saw redemption of $422 billion over the five-year period. This shouldn't necessarily come as a surprise considering the five-year performance ending in August happens to be the worst five-year performance since 1999.

Related Link: This Type Of Diversity Is Working

S&P Dow Jones Indices said in a report on Thursday that during the one-year period ending June 30, 85 percent of large-cap stock funds, 88 percent of mid-cap funds and 89 percent of small-cap funds failed to achieve their essential purpose of matching the performance of the stock indices they track.

The report added that the data from the five-and 10-year period is even worse.

"The numbers are pretty appalling," Bloomberg quoted Aye Soe, senior director of global research at the S&P unit that compiled the report as saying. "Given the choppiness in the markets we would have expected the active managers to come out looking better."

Mutual funds with an international exposure did fare better, but the numbers are still concerning. Over the past year, 75 percent of global funds, 55 percent of international funds and 42 percent of emerging market funds performed worse compared to their respective indices.

Full ratings data available on Benzinga Pro.