The value of U.S. large‑cap equities has fallen sharply in recent months, making the performance gap between active and passive funds increasingly visible. In early October, the major U.S. indices – S&P 500 and Dow Jones Industrial Average – each dropped more than 5 %, while the average return of large‑cap active funds fell to about 3 % but passive funds recorded roughly a 7 % gain in the same period. This divergence has led investors to re‑build portfolios, causing many active funds to see their asset allocations shrink rapidly.
The steep decline in large‑cap earnings is mainly due to several factors. First, global supply‑chain bottlenecks and rising commodity prices have increased production costs, dampening corporate profits. Second, the tightening of U.S. monetary policy and uncertainty over future interest rates have reduced investment demand, causing share prices to slump. Third, the shift toward digital transformation has forced large‑cap firms to re‑allocate resources and adopt technology‑centric growth strategies, which burdens their profitability. These factors constrain active‑fund managers’ risk‑management ability, and a trend toward passive funds is evident.
Investors are responding to these conditions by favoring passive funds. Large‑cap active funds require strong conviction in securities selection and management, increasing operating costs and risk. In contrast, passive funds secure returns through index matching and minimize management expenses. This clear distinction gives investors an explicit choice, prompting many fund managers to move from active to passive strategies.
Major media such as the Korea Economic Daily provide ongoing analyses and outlook on U.S. large‑cap market volatility. Investors should use this information together with risk‑management strategies to design long‑term portfolios. Regulators also need to continually update guidelines to ensure transparency and fairness in fund operations.