The SPIVA Australia Scorecard, prepared by S&P Dow Jones Indices, found a majority of Australian managed funds have been outperformed by their respective benchmark indices over the one-, three- and five-year periods as of June 2014.
The notable exception was small-cap Australian equity funds, with only 8.2 per cent, 7.7 per cent and 17.1 per cent of funds failing to beat the benchmark in the past one-, three- and five-year periods, respectively, said the SPIVA report.
“There are no consistent trends to be found in annual active versus index figures,” it said.
“The only consistent data point we have observed over a five-year horizon is that the majority of active equity funds in most categories fail to beat their comparable benchmark indices.
“International equity and Australian bond funds had the lowest relative performances over the one-year period, with close to 80 per cent of funds underperforming the S&P Developed Ex-Australia LargeMidCap and S&P/ASX Australian Fixed Interest Index,” the report said.
SPIVA found Australian small-cap funds delivered “remarkable returns” over the one-year period, with both the equal and asset-weighted average returns exceeding the S&P/ASX Small Ordinaries return.
“When compared with large-cap stocks, stocks within the small-cap opportunity set tend to be relatively under-researched, which could allow active asset managers to take advantage of any mispricing in the market,” the SPIVA report said.
“This notion has panned out in the Australian market, where the large majority of active Australian equity small-cap funds have outperformed the S&P/ASX Small Ordinaries across all observed time periods.”
