Active managers fall back: SPIVA

The number of active fund managers able to beat their benchmarks has dwindled after a period of strong performance during the market downturn, according to the third quarter Standard & Poor’s Indices Versus Active Funds Scorecard (SPIVA).

Overall, 36% of active Canadian equity managers delivered returns superior to their benchmarks. Performance was slightly weaker among small- and mid-cap managers, with just 31.8% of active funds beating the S&P/TSX Completion Index.

On a year-to-date basis, however, 50% of active Canadian small-/mid-cap equity fund managers have been able to top the benchmark.

Managers in the Canadian Focused Equity class managed to do a little better than the overall average, with 42.7% beating a blended benchmark made up of Canadian and international stocks.

These managers can boast the best outperformance on a year-to-date basis, with 67.5% of them beating the blended benchmark. Global equity managers have also largely been able to beat their benchmarks year to date, with 61.8% posting superior returns.

The SPIVA report admits that active managers have, in general, been able to add value over the past 12 months on both an asset-weighted and an equal-weighted basis, with the exception of the equal-weighted returns in the Canadian equity and Canadian small-/mid-cap equity categories.

But the report’s authors point out that Canadian investors tend to hold their mutual funds for longer periods. Over the past three years, only 12.1% of active managers have beaten their benchmarks, with only 5.9% outperforming over a five-year period. The SPIVA report corrects for survivorship bias.