A new study has found that over the longer term active funds have - on average - outperformed passive funds despite the fact that just 1 in 3 active funds have beaten passive funds this year.

The analysis by platform and SIPP provider AJ Bell, for its 'Manager versus Machine' report, found that active outperformance was particularly lacking this year in the US, Global and Asia Pacific sectors.

Only 34% of active funds have outperformed passive funds in 2021, the report found.

AJ Bell has looked at the best and worst performing funds this year for its analysis.

While some active sectors have failed to deliver AJ Bell says the UK has been a “particularly good home for active managers” with the average active fund returning 134% compared to 95.6% from the average passive fund over 10 years. 

However, Laith Khalaf, head of investment analysis at AJ Bell, said: “2021 has been a pretty grim year for active managers, with passive funds ruling the roost and delivering better returns for investors on average. 

“Outperforming active funds were particularly sparse in the Global and North America sectors, which are hugely important for investors because they are two of the most popular areas for investment, accounting for £270bn of investors’ money.

“As ever, averages and aggregate data can’t tell the whole story, and individual investors do have the opportunity to improve their own lot through fund selection, both active and passive. 

The table below shows the percentage of active funds that have beaten the average passive fund in seven popular equity sectors across three time periods. 

Sources: AJ Bell, Morningstar, total return in GBP to 01/12/2021