Australian equity general funds gained 18.4 per cent on an equal-weighted basis and 18.9 per cent on an asset-weighted basis in 2021, beating the 17.2 per cent gain for the S&P/ASX 200.
The results come from the latest SPIVA Australia Scorecard by S&P Dow Jones Indices which revealed that 42.2 per cent of Australian funds in the equity general category were outperformed by the benchmark last year.
This was well below the consistent underperformance seen over the longer term, with an increasing number of funds in this category being beaten by the S&P/ASX 200 over three years (62.7 per cent), five years (73.5 per cent) and 10 years (79.8 per cent).
Australian equity mid- and small-cap funds also recorded stronger gains on an equal-weighted (22.2 per cent) and asset-weighted (22.3 per cent) basis compared to their respective benchmark, the S&P/ASX Mid-Small index (19.1 per cent).
Priscilla Luk, head of global index research and design for APAC at S&P Dow Jones Indices, said that over half of the Australian equity funds had maintained above-benchmark performance during the second half of the year.
She drew attention to the Australian mid- and small-cap funds, which saw less underperformance than any other category over a three-year period (44.3 per cent).
“However, both Australian equity fund categories failed to demonstrate performance persistence over longer time periods,” Ms Luk noted.
“No Australian Equity General fund and only 3.4 per cent of Australian mid-small cap funds managed to remain in the top quartiles persistently for five consecutive years.”
Meanwhile, S&P Dow Jones Indices reported that 80.4 per cent of international equity general funds were outperformed by the benchmark S&P Developed Ex-Australia LargeMidCap index over the year.
International equity general funds recorded returns of 23.9 per cent and 21.2 per cent on equal- and asset-weighted bases, respectively, compared to a gain of 29.1 per cent for the benchmark index.
The number of funds outperformed by the benchmark in this category has remained consistently high over three years (79.6 per cent), five years (81.4 per cent) and 10 years (92.7 per cent).
For Australian bond funds, the losses suffered in 2021 on an equal weighted (2.5 per cent) and asset-weighted (2.1 per cent) basis were smaller than the 2.9 per cent loss for the benchmark S&P/ASX Australian Fixed Interest 0+ Index.
Meanwhile, 58.5 per cent of Australian bond funds underperformed the benchmark last year, with ongoing underperformance over three years (57.7 per cent), five years (69.5 per cent) and 10 years (78.6 per cent).
Finally, 72.1 per cent of Australian equity A-REIT funds were beaten by the S&P/ASX 200 A-REIT index in 2021 with equal-weighted returns of 24.4 per cent and asset-weighted returns of 25.6 per cent compared to the 26.1 per cent return for the index.
The percentage of underperforming Australian equity A-REIT funds is lower over a three-year (63.6 per cent) and five-year (64.71 per cent) period but higher over the past 10 years (81.5 per cent).
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
