Most actively managed funds failed to beat benchmarks: report

By Staff | November 7, 2018 | Last updated on November 7, 2018
2 min read
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Most actively managed Canadian mutual funds failed to beat their benchmarks over a one-year period, the mid-year scorecard from S&P Dow Jones Indices says.

The scorecard shows how actively managed Canadian mutual funds performed in comparison with the S&P Dow Jones Indices in their respective categories for the one-year period ending June 30, 2018.

The S&P/TSX Composite and S&P/TSX 60 both rose during the one-year period, by 10.41% and 11.45%, respectively.

Six out of seven fund categories underperformed against their benchmarks, the report says. The exception was Canadian dividend and income equity funds. In that category, 67.57% of the funds outperformed the S&P/TSX Canadian Dividend Aristocrats index.

“As the Bank of Canada raised interest rates, yield-focused active equity strategies continued to offer the best relative performance of any category over a one-year horizon,” the scorecard says.

Canadian-focused equity funds showed the worst relative performance, with 94.44% of funds lagging the blended benchmark of the S&P/TSX Composite (50%), the S&P 500 (25%), and the S&P EPAC LargeMidCap (25%).

International equity funds also underperformed the index, with almost 90% of the category’s funds lagging the S&P EPAC LargeMidCap, compared with 73.08% in the year-end 2017 scorecard. Reasons for the underperformance could have included trade tensions and concerns about a slowdown in global economic growth, the scorecard says.

Among funds investing in U.S. equities, only 27.59% outperformed the S&P 500 (CAD), compared with 30.59% in the previous scorecard.

Most Canadian small/mid-cap equity funds (90.91%) also failed to outperform the S&P/TSX Completion index.

Read the scorecard here. staff


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