The Financial Post reports in its Tuesday edition that this year's market is proving to be a strange one, and one that is fooling most professional investors given that two-thirds of mutual fund managers are underperforming their passive benchmarks. Post columnist Martin Pelletier writes that helping to make this a challenging market is that there has been large algorithmic herding into the megacaps in the United States despite modest financial results, which is causing a large and unexpected multiple expansion. For example, Apple is reaching all-time highs. Also, while raw material costs were falling, many companies maintained their pricing, causing a large profit margin expansion that helped deliver better-than-expected earnings growth of 8 per cent. It turns out, volatility-control funds have added about $72-billion (U.S.) in U.S. stocks during the past three months, which is a greater flow than in 80 per cent of the three-month periods over the past decade. One theory is that the trade among these funds is to sell single-day volatility in the SPDR S&P 500 ETF Trust and then let the algorithms play with 20 megacaps to keep enough of them rangebound, and pocket the premium while market breadth deteriorates.