Active managers struggle to beat benchmarks in 2017: SPIVA report

Last year, the majority of active managers investing in domestic and global equity failed to outperform their respective benchmarks, says S&P Dow Jones Indices in its latest SPIVA Canada scorecard.

The scorecard reports the performance of actively managed Canadian-domiciled mutual funds, net of fees, versus their benchmarks over the last one-, three-, five- and 10-year time frames. The funds invest in domestic and foreign equities.

Domestically, all categories but one failed to outperform. In the one winning category, Canadian Dividend & Income Equity, nearly 58% of the funds performed well over a one-year period, ending Dec. 29, 2017. However, no funds in this category kept pace with their benchmark (the S&P/TSX Canadian Dividend Aristocrats) over the 10-year period.

In the foreign equities fund group, the report says, “Managers investing in U.S. equities saw almost no change in their relative performance over the various periods compared with the mid-year 2017 scorecard.” But only 30.59% were able to provide excess returns over the S&P 500 (CAD) in 2017.

For international and global equity, results were similar: only 26.92% and 20.97% of managers, respectively, outperformed over the same period.

Read: How active beat passive in 2017

Most active managers also underperformed their respective benchmarks over the long term—over five and 1o years—also ending Dec. 29, 2017.

Of domestic equity managers, the best performance over 10 years was in the category of Canadian small- and mid-cap equity, but only 22.41% of managers outperformed the index. Only 6.06% and 2.45% of international and global equity managers, respectively, outperformed over the same time frame. For U.S. equities, 1.67% were able to outpace their benchmark over the last decade.

In the five-year time frame, 10% of international equity fund managers and 5.63% of global equity funds outperformed their respective benchmarks, compared to 2.2% of U.S. equity managers.

Though Canadian equities fared relatively better over the five-year period, the report says, “The data for the five-year period showed the losing pattern repeating across all categories,” with most active managers underperforming benchmarks.

Read the full report here.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.