The results of S&P Global’s Mid-year 2016 S&P Dow Jones Indices Versus Active Funds (SPIVA) Australia Scorecard, which tracks the performance of almost 1000 actively managed equity and bond funds, found that across all asset categories the majority underperformed their relevant index.
“As of June 2016, the majority of Australian funds in all categories, except the Australian mid- and small-cap fund category, were outperformed by their respective benchmarks over the one-, three- and five-year periods,” said S&P Global senior director global research and design Priscilla Luk.
“International equity, Australian bond, and A-REIT funds significantly underperformed their respective benchmark indices over the one-, three- and five-year periods.”
Over 90 per cent of International Equity and Australian A-REIT funds underperformed their relevant benchmarks over three- and five-year periods, Ms Luk noted, with International Equity funds additionally reporting the lowest fund survivorship.
“Over the five-year horizon, Australian funds from all categories had an overall survivorship rate of 78.4 per cent, with Australian bond funds recording the highest survivorship rate – 83 per cent,” Ms Luk commented.
“International equity funds disappeared at the fastest rate, with more than one-quarter of them being liquidated or merged.”
Australian mid- and small-cap funds managed above benchmark returns over the one-year period, making them the only Australian fund category to beat the benchmark for that period, Ms Luk said, adding that these categories also outperformed over the five-year period.
“The average return of Australian mid- and small-cap funds exceeded the S&P/ASX Mid-Small by 3.6% over the five-year period,” Ms Luk said.
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