Rainmaker research has shown the managed funds' sector has acutely underperformed its benchmarks for the 12 months to 30 June.
The Rainmaker Roundup Report found that only 10% of Australian equities large cap funds outperformed in 2018-19.
"The scope of underperformance varied from extreme for property to slight for international fixed," the report said.
"In the property funds sector underperformance was 5.9%. The medium property fund returned 13.4% for the year while the S&P ASX200 A-REIT Index returned 19.3%. Almost 90% of funds underperformed this benchmark."
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The Australian equities large cap sector also failed to perform, with only ten of 93 funds outperforming the benchmark index, resulting in an 89% underperformance ratio.
Despite the overall underperformance, the report said it needs to be put into context.
"In most years the actively managed fund sectors normally match or slightly exceed their sector's benchmarks. This year was an aberration," Rainmaker said.
"Nevertheless the severity of the 2018-19 underperformance is enough to noticeably and artificially distort long-run rolling benchmarks."
However, in the three-year period to June both property and international fixed interest outperformed the benchmark.
Over five years only three sectors outperformed: international equities large cap by 0.10 percentage points, emerging markets by 1.1 percentage points and Australian equities small cap by 1.3 percentage points.
"With intensifying focus on indexing, ETFs and super funds shifting towards self-management, this underperformance is unfortunately timed," the report said.