85% of funds underperformed S&P 500

Eighty-five percent of actively managed, large-cap funds underperformed the S&P 500 in the past year, new data from S&P Global shows.

The firm’s Spiva statistics, released Thursday in a mid-year report, are updated to June 30, and show over the past five years, an even higher rate, 92%, of large-cap U.S. funds underperformed the American benchmark.

“The figures are equally unfavorable when viewed over longer-term investment horizons,” the S&P report says. “The headline international equity and emerging market equity indices rebounded sharply during the first half of 2016. The gains, however, were not sufficient to erase the losses sustained in 2015.”

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S&P Global notes that active funds with foreign exposure performed worse, and fund size also made a difference. “Generally, larger funds perform better than smaller funds,” it says.

The data uses fund returns net of fees, with S&P Global noting: “Fees have an important impact on fund performance.”

The report adds: “The hunt for yield has become increasingly challenging for fixed income managers. During the one-year period studied, the majority of managers investing in government and corporate credit bond categories underperformed their benchmarks, with the exception of those managing intermediate-term corporate credit funds.”

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Staff

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