More than half of Australian equity funds beat their S&P benchmark indices in the first half of 2021.
As per S&P Dow Jones Indices’ latest SPIVA Australia scorecard, the S&P/ASX 200 gained 27.8 per cent over the 12-month period ended 30 June 2021.
By comparison, Australian Equity General funds notched higher returns of 29.2 per cent and 30.1 per cent on equal and asset-weighted bases, respectively, over this same period of time.
All in all, 55 per cent of funds in this category outperformed the S&P benchmark for yearly performance. However, the gulf between the two looks less enticing for investors over a long-term horizon.
SPIVA’s latest Australia scorecard found that 55.7 per cent and 80.8 per cent of Australian Equity General funds failed to beat the benchmark over a five-year and 10-year period, respectively.
Australian mid and small-cap funds performed similarly, with equal long-term prospects.
Despite strong gains of 34.5 per cent for the S&P/ASX Mid-Small over the one-year period ended 30 June, 65 per cent of Australian Equity Mid and Small-Cap funds beat the index.
Nevertheless, when it came to five-year and 10-year horizons, 65.3 per cent and 55.1 per cent of funds underperformed S&P’s benchmark.
By comparison, international equity funds fared worse, with as many as 54.6 per cent of funds said to have failed to beat the benchmark in the 12 months to end June.
In terms of their 12-month performance, international equity funds returned 28.5 per cent and 24.5 per cent on equal and asset-weighted bases, respectively, to 30 June 2021.
Looking ahead, the research noted that 80 per cent and 90 per cent of funds in this category will fail to outperform S&P’s Developed Ex-Australia LargeMidCap index over a five-year and 10-year period, respectively.
With a loss of 0.87 per cent over the 2020-21 financial year, the S&P/ASX Australian Fixed Interest 0+ Index lost out to around 70 per cent of Australian bond funds.
However, over a longer five-year period, 70.2 per cent of Australian bond funds failed to beat this benchmark. Stretched over a 10-year period, this disparity grew to 85.5 per cent.
Last but not least, S&P’s latest scorecard found that Australian Equity A-REIT funds posted gains of 32.6 per cent and 32.8 per cent on equal and asset-weighted bases. An exception to the trend seen elsewhere, this saw 58.5 per cent lag the S&P benchmark for the category.
Compared to mid and small-cap funds or bonds, the long-term horizons for this difference weren’t as stark. Over a five-year period, 56.5 per cent of funds in the category underperformed.
Over a 10-year period, that figure rose to 78.8 per cent.
