More Bad News for Active Managers

The latest edition of the Standard and Poors SPIVA report that evaluates active fund managers vs their benchmark indices has just come out. The results seldom differ much
 As Reuters reports:

S&P Dow Jones Indices just published its mid-year scorecard of S&P indices versus active funds (SPIVA). Active funds are the funds that attempt to offer some sort of superior return relative to some benchmark.

"According to the data, 59.78% of large-cap managers, 57.84% of mid-cap managers and 72.79% of small-cap managers underperformed their benchmarks," said Aye Soe, director of index research and design. This is for the 12-month period ending June 30, 2014.

Fund managers have a knack for getting lucky over short-term periods. When you extend the performance period from 12-months to 5 years, the results are much uglier.

"The past five years have been marked by the rare combination of a remarkable rebound in domestic equity markets and a low-volatility equity environment," Soe added. "This combination has proven to be difficult for domestic equity managers, as over 70% of them across all capitalization and style categories failed to deliver returns higher than their respective benchmarks."