Fund Managers Beat S&P 500 in August
NEW YORK -- Mutual-fund managers can rejoice. For only the second time in the past 12 months, actively managed stock funds finished the month ahead of funds pegged to one of the market's most widely followed indexes.</br></br>After trailing the Standard & Poor's 500-stock index for most of the past year, actively managed funds weathered the recent tumult in the stock market better than index funds. And they did it largely by benefiting from many of the same factors that have hindered them in the past year.</br></br>It may not be much to brag about, however, because actively managed funds actually just posted smaller losses than index funds. According to Lipper Analytical Services Inc., domestic equity funds, excluding S&P 500 funds, posted an average loss of 1.65% between the end of July and Aug. 28. Index funds lost 5.19% on average. The S&P, meanwhile, dropped 5.17%.</br></br>Gus Sauter, managing director at index-fund proponent Vanguard Group, acknowledges that the climate has changed in the stock market. "The environment we've experienced over the last couple of months has made it a little easier for the active manager when compared to the S&P," says Mr. Sauter, who heads the index-fund group at Vanguard. "It's not that it's a terrible story for the S&P, it's more that it's moved down to the middle of the pack."</br></br>Using S&P 500 funds as a benchmark, "passive funds have been one of the poorer investments over the past four weeks, instead of one of the better ones, as they had been for quite some time," says Michael Lipper, president of Lipper Analytical Inc.