What's going on?

Investors have been keeping active this year: fresh data from Bank of America on Tuesday showed May saw particularly historic levels of outperformance at �actively managed� funds.

What does this mean?

Active fund managers research and invest in individual stocks they think will shine, rather than �passively� tracking the performance of an index. That approach paid off last month: 70% of active funds focused on large US stocks outperformed the wider market � one of the highest percentages in recent history. A similarly strong showing in February means more than 60% of these funds are currently beating the market in 2021 so far.

That impressive outperformance is partly due to sluggish price rises among market-dominating tech stocks: actively managed funds typically invest more in the smaller shares that have received an outsized boost from progress on coronavirus vaccination. They also tend to prefer cheap-looking �value� stocks over �growth� stocks, which have fallen in investors� favor this year.

Why should I care?

The bigger picture: It�ll never last.
Beating benchmarks is a big deal for most active managers: it’s how they justify fat fees from investors who could instead just passively track an index�s performance via a cheap exchange-traded fund (ETF). But investors don�t seem convinced active funds will be able to keep it up: a record $305 billion has flowed into US stock ETFs in 2021 so far, compared to $250 billion in the whole of 2020.

Zooming out: Activists matter.
An activist fund is both actively managed and aggressive in seeking change at the companies it invests in. Europe�s biggest activist investor, Cevian Capital, announced on Tuesday that it�d built a 5% stake at Aviva, and that it was pushing the British insurance giant to cut costs and distribute an additional $7 billion to shareholders � who promptly sent the stock�s price up 3%.