Large-cap funds underperform index

Large-cap funds underperform index

Large-cap Australian equity funds returned an average gain of 5.6 per cent, with most continuing to underperform the index, says S&P Dow Jones Indices.


According to the SPIVA Australia Scorecard report produced by S&P Dow Jones, Australian large-cap funds returned an average of 5.6 per cent for the 12 months to June, with 52.6 per cent of the funds underperforming the S&P/ASX200.

“As of June 2015, the majority of Australian funds in all categories, except Australian mid- and small-cap funds, were outperformed by their respective index benchmark over the one, three, and five-year periods,” the report said.

Over the past year, 55.2 per cent of Australian mid- and small-cap equity funds lagged the index. However, over the three- and five-year periods, mid- and small-caps outperformed the benchmark by significant margins, according to the report.

Although Australian REIT funds recorded an average return of 17.8 per cent, they still lagged the benchmark by 2.5 per cent in the last year.

The report found that the majority of funds in this sector did not deliver a better return than the benchmark, with 92.8 per cent, 88.2 per cent and 81 per cent of funds underperforming over the one, three and five-year horizons respectively.

“International equity and Australian bond funds had the highest portion of funds underperforming their respective benchmark indices,” the report stated.

“Not a single Australian bond fund outperformed the benchmark in the past one-year period.

“Over the three- and five-year horizons, the results are less unfavourable, in that 82.4 per cent and 86.3 per cent of funds lagged the benchmark, respectively.”

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