Standard and Poors quarterly publishes their SPIVA report comparing the performance of actively managed funds vs their indices. And despite the fact that the active managers eash year proclaim "it's a stock pickers' market..the numbers show otherwise.
From Investment News
The S&P Indices Versus Active (SPIVA) report for 2017 shows growth fund managers improved markedly compared to their performance six months earlier. Over the one-year period, 63.08% of large-cap managers, 44.41% of mid-cap managers, and 47.70% of small-cap managers underperformed the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, respectively.
That's the good news.
Over the past five years and the past 15 years, no more than 16% of managers in any category of actively managed U.S. mutual funds beat their respective benchmarks. In the longer term, the best records went to large-company value managers, who had a 29.56% success rate against their benchmark over the past 10 years and a 14.29% success rate in besting their bogies over the past 15 years.
As for international stock funds:
Only small-cap international funds beat their benchmarks over the past 12 months. The majority of managers in large-cap international funds and emerging markets funds lagged their benchmarks. And for any period longer than three years, most international funds lagged their indexes.
The SPIVA website is here with much more data.
The SPIVA website is here with much more data.
Interestingly composing a "smart beta" porfolio did perform well compared to the overal market. A portfolio equal weighted to momentum (mtum), quality (QUAL) minimum volatility (USMV) and value VLUE outperformed the S+P 500 25.2% vs 21.7% for the S+P 500.
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| 4 factor portfolio (green) S+P 500 Blue |
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| 4 factor portfolio (green) S+P 500 Blue (total return top volatility bottom) |
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Bond managers did not perform much better last year. The passive Barclay’s US Government/Credit Long index outperformed nearly 97 percent of active investment-grade long funds in 2017
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