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Two Big Reasons Active Managers Underperform

The Macro Institute's Weekly Economic Primer

Author

The Macro Institute
June 08, 2026

Don’t have time to watch the whole video? Here’s 5 Key Takeaways:

🔹Active Managers Have Struggled To Beat Their Benchmarks: Over the last 15 years, active management has gotten harder. Only ~30% of large-cap managers beat their benchmark any given year, down from ~50% from 2000-2009.

🔹Active Managers Struggle When Growth Slows: U.S. GDP growth has consistently slowed over the past decades. This has led to a decrease in the number of high growth companies in the S&P 500. When growth is slow, active managers tend to underperform, as they pile into the same few names delivering growth.

🔹Holding Periods Have Dramatically Contracted: Since the 1960s, the average holding period for a stock has fallen from over 8 years to only 0.6 years. This greatly increases the importance of understanding the business cycle as your entry point becomes increasingly important when holding investments for short periods of time.

🔹Investors Have Not Been Trained To Understand Macro: Investors have not been prepared for this slow growth, high turnover environment. Both of these factors point to macro dominance, and active managers have largely focused on fundamental analysis throughout their career.

🔹Have No Fear… We Are Here To Help: The good news is that through the Macro Specialist Designation and the CFA’s Practical Macro PSM it’s never been easier to learn the macro skills to thrive in today’s investment environment.

Miss our last few videos? No worries. Here are some of the most popular 👇

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Macro Data Center

The Macro Week Ahead

📆 Last Week’s Data Key Takeaways

🔹 May Payrolls Topped Forecasts, But The Freeze Continued: Nonfarm payrolls jumped +172K in May (vs +80K consensus) and the unemployment rate held at 4.3%. This marked the strongest three-month advance in over two years, with hiring in March and April revised up by 93K combined. However, the share of unemployed who can't find their way back to work climbed to a cycle-high 27.5%.

🔹 JOLTS Showed A Spike In Openings, But Hiring Cratered: Job openings increased to 7.6 million in April (vs 6.8M forecast), the highest level since May 2024. However, the hiring rate slipped. Companies hired a total 5.12 million workers during the month, a decline of 419,000 from March. The layoff rate dropped from 1.2% in March to 1.1% in April, meaning Americans are still enjoying near-record job security.

🔹ISM Manufacturing Surged To A Four-Year High: The ISM Manufacturing PMI registered 54.0 in May, its highest reading since May 2022 and marking the 19th consecutive month the economy has been in expansion. The New Orders Index expanded for the fifth consecutive month, registering 56.8, and price pressures remained elevated, but were below the levels seen in April.

🔹 ISM Services Accelerated Despite Low Consumer Sentiment: The ISM Services PMI registered 54.5 in May, an increase of 0.9 percentage point compared to April's figure. New Orders were the standout, registering at 57.3, an increase of 3.8 above April's figure of 53.5. The data confirms services demand remains resilient even as consumer sentiment has recently hit record lows.

🔹 Construction Spending Beat On Public Strength: Construction spending in April was estimated at an adjusted annual rate of $2.17 trillion, up 0.9% year-over-year. Spending on data-center construction eclipsed $50 billion in April for the first time, with data centers now accounting for 2.3% of all US construction spending.

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