Bank of America reported that 53% of large-cap active equity funds outperformed their Russell benchmarks in June, marking a monthly rebound for active managers. For the first half of the year, however, the hit rate for large-cap active funds was 38% - effectively in line with the long-term annual average of 37% and an improvement from a 29% hit rate in 2025.
Style divergence in the first half
Performance differed markedly across investment styles. Growth-focused funds led the pack in the first half, with 57% outperforming their Russell benchmarks. By contrast, Core funds managed a 25% hit rate, while Value funds lagged at 18%.
The disparity reflected, in part, the performance gap between the Russell 1000 Value and Growth indices. The Russell 1000 Value rose 16% in the first half, compared with a 5% gain for the Russell 1000 Growth, creating a higher hurdle for Value managers to clear.
Semiconductor exposure and benchmark drivers
Bank of America highlighted that a small group of semiconductor and hardware names materially drove benchmark returns in the first half. Five companies - Micron Technology (NASDAQ:MU), Intel (NASDAQ:INTC), SanDisk, Applied Materials (NASDAQ:AMAT), and Advanced Micro Devices (NASDAQ:AMD) - together contributed about 7 percentage points to the benchmark’s first-half return. Value funds tracked by Bank of America tended to be underweight these names, a positioning that hurt relative performance.
Following the latest Russell index rebalance, all of those stocks except Intel were removed from the Value benchmark, according to Bank of America.
Rebalance and index concentration
Bank of America described the most recent Russell rebalance as the largest on record and said it has left benchmarks more concentrated. The Russell 1000 Growth Index now lists 365 companies but, in terms of concentration, is equivalent to an equally weighted portfolio of just 21 stocks. Around 70% of the index is made up of technology names and the so-called Magnificent 7. Active portfolios have trended toward greater concentration alongside these benchmark shifts since 2022.
Small- and mid-cap fund performance
Smaller-cap active managers posted stronger monthly results in June. Ninety-one percent of small-cap funds and 71% of mid-cap funds outperformed their respective Russell benchmarks in June, a recovery from hit rates below 20% for small caps and below 30% for mid caps in May. Over the first half, 40% of small-cap and 54% of mid-cap active funds outperformed benchmarks, both exceeding the 38% hit rate recorded for large-cap funds.
These results paint a picture of uneven active manager outcomes across market caps and styles, with benchmark construction, sector leadership in semiconductors and hardware, and index concentration emerging as key influences on relative performance.