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Australian equity general funds linger below benchmark

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Fund managers significantly underperformed against the S&P/ASX 200 index over the course of 2022, according to a new analysis.

S&P Dow Jones Indices has published the SPIVA Australia Scorecard for the 12 months ending 31 December 2022, revealing 78.5 per cent of Australian equity general funds underperformed the S&P/ASX 200 index.

The underperformance rate rose to 57.6 per cent over the full year, with higher underperformance over the longer term.

Over the five, 10, and 15-year horizons, the scorecard reported an underperformance rate of 81.2 per cent, 78.2 per cent, and 83.6 per cent, respectively.

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Moreover, just 23.4 per cent of Australian equity mid- and small-cap funds surpassed the S&P/ASX mid-small in 2022, with over 80 per cent underperforming on a risk-adjusted basis.

The small- and mid-cap category recorded a stronger performance over the longer term, with 54.7 per cent underperforming the benchmark over a 15-year time horizon.

Meanwhile, 56.3 per cent of international equity general funds fell below the S&P Developed Ex-Australia LargeMidCap in 2022. 

Over the five and 10-year periods, more than 86 per cent and 95 per cent of funds underperformed, respectively.

When assessing the Australian bonds category, S&P reported 69.2 per cent of funds underperformed the S&P/ASX Australian Fixed Interest 0+ Index. 

A similar trend was recorded over the longer term, with active funds reporting an underperformance rate of 66.1 per cent and 79.3 per over five and 10-year periods, respectively.

Active managers across the real estate investment trust (A-REIT) segment outperformed other categories with an underperformance rate of 41.2 per cent — the lowest since the launch of the SPIVA Australia Scorecard in 2013.

This was despite a 20 per cent fall in the S&P/ASX 200 A-REIT — the worst annual performance since 2008. 

However, underperformance rates increased over longer time horizons, rising to up to 79.1 per cent over 15 years.