The short answer is no.

One of the prime active manager’s pitches against passive investing is that they outperform in bear markets. The argument is that active managers can foresee downturns and position their portfolios accordingly, adding value through better selection into more defensive securities, compared to an index fund manager who must track the benchmark regardless of market direction. A few studies remotely confirm claims that active managers perform better in down markets. Could that be due to their superior stock selection abilities? Of course not. We already know that the market is a zero-sum game, and for every outperforming active participant, there has to be an equally underperforming active participant. Or every portfolio manager overweighting defensive stocks, there must be one overweighting cyclical stocks. Once you add in expenses and the picture looks even less likely. What is going on, then? When you look under the hood, the answer becomes apparent:

1. Cash positions help active managers limit losses. Open-end funds hold significantly more cash to service redemptions and have the necessary liquidity. For example, according to Morningstar, the average US Large Cap fund holds nearly 3.5% cash position, the equivalent S&P 500 ETF holds less than 0.3%, and the simple benchmark holds zero cash. In down markets, this more than 3% difference will show that a more significant percentage of active managers are beating the index. It also explains why in bull markets, passive vehicles outperform.
2. Measurement errors, as a result of using an inappropriate benchmark. If active managers’ portfolios include securities outside the index, for example, small caps exposure which has outperformed the S&P 500 can give the appearance that active managers are beating passive S&P 500 vehicles.
3. Missing managers. When performance statistics are used, they typically only include mutual funds. However, hedge funds, institutions, individuals, and others are also active investors. By excluding them from the calculation, studies paint only a partial picture.

It is mathematically impossible for the aggregate active participants to outperform the market since their allocation generates the relative market capitalization weights. Nevertheless, the media and the less informed investors commonly believe such fallacies.