Active investing is having an identity crisis

Surprise, surprise: Stock pickers are still struggling to pick stocks.

During the 12 months through June 30, just 27% of actively managed US large-cap funds performed better than their passive alternatives. That’s still better than their record over the past decade, when just 13% managed to outperform.

The rebound makes sense, given how favorable the current market backdrop is. Higher interest rates are separating companies with strong balance sheets from those that depended on cheap financing, while AI is separating the disruptors from the disrupted. That’s creating clearer winners and losers across the market, increasing stock market dispersion—the difference between how individual stocks within a given index perform—to its highest level in over 20 years.

In theory, more winners and losers means more chances for active managers to separate themselves from the pack. There’s just one problem: The winners are heavily concentrated at the top.

The S&P 500’s 10 largest companies now make up more than 40% of the index, the highest share since the 1960s. Active managers tend to diversify rather than match those giant weights, so if mega-cap tech keeps ripping, even a portfolio full of otherwise good picks can fall behind the benchmark index.

A different strategy

But one fund is bucking that trend using a somewhat unconventional approach.

The $2.5 billion Harbor International Core Fund held over 800 stocks as of the end of June—about eight times as many as the average fund. Its annual turnover rate is 123%, versus less than 40% for the majority of funds tracked by Morningstar, with fund sub-advisor Acadian Asset Management running more than 30,000 stocks through its quantitative models each day to decide which companies make the cut.

So far, it’s working. The fund returned 15.55% in the first half of 2026, versus 9.44% for the MSCI EAFE, its benchmark for developed-market stocks outside the US and Canada. The S&P 500 gained 9.6% over the same period.

Despite owning hundreds of companies, the fund isn’t completely indiscriminate: Its 10 largest holdings accounted for roughly 23% of assets as of June 30, with names including Novartis, Roche, ASML, ABB, and ING.

Active gets passive, passive gets active

“Stock picking” is starting to become a pretty generous description. When an active fund can own more names than the indexes themselves, what exactly are investors paying the extra fees for?

That helps explain why investors have increasingly shifted toward passive funds. In 2007, active equity funds held more than three times as much money as passive strategies—today, passive funds hold almost twice as much.

But at the same time, the line between active and passive is getting blurrier. There are now passive ETFs tracking everything from semiconductors and defense to small caps and individual countries, meaning investors can make very active portfolio decisions using supposedly passive products.

At this rate, with a Bloomberg login and a tasteful headshot, maybe you could be an active manager, too.—SY