Only 16 per cent of actively managed US funds have beaten the S&P 500 index, a commonly used benchmark for the US stock market, over the past year.
Hargreaves Lansdown analysis has revealed that the average return of UK-based funds with the S&P 500 as their benchmark is 14.6 per cent, compared with 16.7 per cent from the S&P 500 itself over one year to 31 August 2014.
Last week the S&P 500 closed at its highest ever level, just above 2,000, fuelling investors' fears that the US stock market is over priced. At the end of August the S&P 500 stood at 2,003.37, having gained 9.14 per cent over one year.
Analysts say the level of the S&P 500 is above its long-term average in relation to earnings, and looks expensive when compared with other markets.
Historically, the US market has proved notoriously difficult for active funds to beat. Fund managers often blame the saturation of financial analysis on the region for their failure to outperform.
Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: "The US large cap market is notoriously difficult to beat because the stocks in it are so well analysed. And UK funds face an additional hurdle because they have to pay 15 per cent withholding tax on dividends. For investors looking to get broad access to the US market, we would suggest the L&G US Equity Index which tracks over 600 of the largest US companies."
Simon Clinch, a US equities fund manager at Invesco Perpetual, contests performance data on US funds, claiming that more than half are closet index tracking funds, and should not be included in the figures.
He said: "Out of 397 US equity mutual funds benchmarked against the S&P 500, the average active share (how different the share selection is to the index) is 78.7 per cent. I believe that truly active managers should have an active share ratio of above 80 per cent at the very least.
"Furthermore, the funds with the highest active share ratios have outperformed those with lower active share - and indeed the group averages - on a fairly consistent basis."
