The data – run on long-only, large-cap Australian equity funds – suggests that while active funds can outperform over the medium-term, more than 50 per cent consistently underperform.
Some of the findings included:
- As of 30 April 2021, only 43 per cent of funds outperformed the ASX 200 Total Return Index over three years and only 46 per cent outperformed over five years.
- Only three funds outperformed over five years but had not outperformed over three years.
- Only two funds outperformed over three years but underperformed over five years.
- The average outperformance over three years was 4.2 per cent per annum while the average underperformance was -2.9 per cent per annum.
The results were vastly different when looking at mid, small and microcap sectors, with 78 per cent of funds outperforming the index over three and five years.
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AFM said the data released shows “through strong manager research, active returns can be achieved, and investors can gain significant outperformance”.
Neil Griffiths
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
