A lackluster year for the stock market has turned into a strong one for active fund managers.
After a full decade of languishing well behind the benchmarks used to gauge their performance, the group has turned in a stellar performance in 2015, at least compared to historical norms.
Active managers across most classes are close to 50 percent after-fee outperformance. U.S. equity managers are beating at a 49 percent rate, more than 47 percent of all equity managers are ahead of the game, while even managers of taxable bond funds are beating at a 49 percent clip, according to data that Morningstar provided to CNBC.com this week. (Tweet this)
That's a massive change for a group that's been beaten up during this area of low volatility where aggressive central bank easing has made asset classes move up and down in unison and where stock pickers have had increasingly fewer opportunities to find assets that break away from the pack.
"You don't have a market that from an index perspective is outperforming. What we have is an increase in volatility," said Todd Schoenberber, president of LandColt Capital. "That's great on a number of levels.... If you're an active manager and you believe that stocks will do well in the second half of the year but you're trying to find an entry point, you take advantage of those selloffs."
Indeed, the S&P 500, despite being within 0.6 percent of its all-time high, is up just 2.6 percent year to date, while the Dow Jones industrials are up only 2.2 percent. However, the broad market indexes have traded within a broad range, with the S&P 500 16 percent off its 52-week low.
Active managers and stock pickers look for dispersion, or the difference between sector returns, as opportunities. After years of low dispersion, this year has provided yawning gaps, with the best-performing sector, health-care, separated from the worst-performing, utilities, by 14.4 percentage points. The low-volatility environment came about while the Federal Reserve was pumping nearly $4 trillion of liquidity into the markets and keeping short-term interest rates near zero.