Increasing numbers of investors are turning toward passive fund managers as active funds underperformed in the first half of this year, according to a new report.
Just 42% of active funds outperformed passives in the first half, the same as seen in 2025, according to the 'Manager Versus Machine' report from platform AJ Bell.
Over a 10 year basis, only 21% of active managers outperformed passive funds, the worst performance seen since AJ Bell began the analysis in 2021.
Three out of every five funds bought and sold on AJ Bell’s DIY investor platform in the first half were actively managed, but passive funds dominated the top 100 most popular fund choices by more than two to one.
Dan Coatsworth, head of markets at AJ Bell, said: “It’s no wonder passive funds are grabbing investors’ attention. We’ve had yet another six-month period where a large chunk of professional stock pickers failed to deliver the outperformance they’re being paid to do.
“Analysis of AJ Bell DIY investor activity between January and June 2026 found that passive funds accounted for more than two thirds of the top 100 most popular funds, while actively managed funds featured heavily among the biggest outflows. Investors are voting with their wallet and passive is winning.”
Global active funds had their second worst period since 2021, with just 22% beating passives in the sector. The worst performing funds were UK active funds, where just 19% beat their passive counterparts during the half.
Sectors which performed better for stock pickers were Asia Pacific ex Japan and Global Emerging Markets. Active funds in the Asia Pacific ex Japan sector had their best period since 2021, with 65% beating the performance of their passive counterparts.
For Global Emerging Markets funds, 63% of active managers beat their passive counterparts, a three-year high.