By KEN BROWN

A very boring stock-market event later this summer will provide a surprising answer to a perennial question: Why are most fund managers failures?

The event is the creation of a new sector in the stock market. The winners here are real-estate investment trusts, which will become their own category, joining technology, health care, utilities and the like. REITs, which own commercial real estate and generate healthy dividends from the rents, will be split off from financial stocks, where they have held an awkward place alongside banks and insurers since these sectors were created in 1999.

The shift itself is a real yawner. “I'm a little surprised at the interest,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

What's interesting is that the split exposes one reason why active fund managers have consistently failed to beat the indexes. REITs are by far the best-performing asset class in the market over the past 15 years. And most actively managed funds have largely ignored these stocks.

Since 2000, REITs have returned an average of 12% a year, according to J.P. Morgan Asset Management. That crushed the No. 2 finisher, high-yield bonds, which returned 7.9%. Large-cap U.S. stocks returned 4.1%.

Despite the performance, nearly 40% of large-cap core mutual funds, which largely invest in S&P 500 stocks, don't own any REITs, according to Goldman Sachs. Overall, funds with no REIT exposure have a total of $528 billion in assets, Goldman says.

Funds that do own REITs hold about 2% of their assets in the stocks, less than two-thirds of the sector's weight in the market, Goldman says. Turning REITs into its own sector will make it clear which managers are avoiding real estate. Of course index funds have always had a full weighting in REITs.

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