Even after the election of pro-business candidate Donald Trump unleashed a flight out of bonds and into stocks, active mutual funds lost out.
While exchange-traded funds raked in big money since the election, actively managed funds posted their third-worst month for outflows in history in November.
2017 is their last chance to stem the tide, according to Jefferies analyst Daniel Fannon.
"The environment for active managers to outperform benchmarks has been challenging for many years now," wrote Fannon in a note to clients Wednesday.
"However, with 2017 shaping up to be a year of higher interest rates and volatility, there is the potential for higher dispersion amongst stocks and sectors. This represents the last chance for active managers, who tend to have a quality bias in their asset selection, to try and outperform and slow down the migration to passive."
The asset manager stocks have beat the market since the election so there appears to be some optimism that they have a fighting chance to make a comeback. T. Rowe Price is up 21 percent, Franklin Resources has climbed 16 percent and Invesco shares have rallied 10 percent since Nov. 8.
This chart from Jefferies shows what the active fund industry is up against: