Stocktake: Active funds underperform – again

Buying in the hope of choosing an outperformer really is a low-probability bet

The US figures are similarly grim. File photograph: Getty

The US figures are similarly grim. File photograph: Getty

 

Most active funds continue to disappoint investors, according to S&P Dow Jones Indices’ latest scorecard.

Between July 2020 and June 2021, a majority of funds underperformed their benchmarks in every region except Australia. European fund managers might protest that their underperformance was minor – 51 per cent of funds underperformed the S&P Europe 350, while 49 per cent outperformed.

However, only a quarter of managers outperformed over three- and five-year periods, while just 15 per cent managed to do so over the last 10 years.

The US figures are similarly grim. Fewer than half (42 per cent) outperformed over the last year; over five and 10 years, that figure falls to just 27 and 17 per cent, respectively.

Investors buying into active funds invariably hope they choose one of the rare outperformers, but this really is a low-probability bet.

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