Some 90% of active funds in Europe underperformed their benchmarks between mid-2018 and mid-2019, despite this being a period of volatility in which such managers are supposed to do well, according to the latest S&P Indices Versus Active Funds (Spiva) Europe Scorecard.
The data suggests 90% of actively manged euro denominated pan-European equity funds underperformed the S&P Europe 350 over a year, and that 78% underperformed over five years, with 88% underperforming over 10 years.
Some 84% of actively managed euro denominated US equity funds underperformed the S&P 500 over the past year analysed. Over five years the figure is 92%, and for 10 years it is 98%.
In the category of euro denominated global equity funds, the underperformance against the S&P Global 1200 over one year was 87%. Over five years it was 94%, and over 10 years it was 99%.
Euro denominated emerging market equity funds continued to underperform the S&P/IFCI over the one-year period. The figure was 58%. For five years it was 91%, and for 10 years 95%.
In the UK - which there has been significant ongoing net outflows from UK equity and equity income funds according to data from Calastone - the Spiva data suggests 81.5% of active UK equity funds underperformed the S&P UK BMI over the year period. Over 10 years some 74% underperformed.
The picture is mixed for UK small cap equity. Since the Brexit referendum in mid-2016, the average actively managed UK small cap equity fund outperformed the S&P UK SmallCap by 3.4% annually on an asset weighted basis. However, Spiva adds that in the past one year period, some 80% of such active funds underperformed the index.
Andrew Innes, EMEA head of Global Research and Design, S&P, said: "The steep declines across equity markets in late 2018 were accompanied by broad underperformance across many active funds in Europe. This defied conventional belief that active managers tend to have an advantage in volatile markets. Despite markets improving in the first half of 2019, active managers were generally not able to make up for lost ground."
To view the full report, click here: https://www.spindices.com/documents/spiva/spiva-europe-mid-year-2019.pdf