The S&P Indices Versus Active (SPIVA) Europe Year-End 2017 Scorecard is composed of a rich dataset of active fund performance figures and insights for those wishing to participate in the active versus passive debate. The coverage and detail in the report may be extensive, but the conclusions needn’t be complex. By visualizing the data as charts, the findings can be brought to life. Here are three key takeaways that the charts help depict more clearly than numbers ever could.
1. The majority of funds have underperformed their benchmark over long time horizons.
While the percentage of funds that were beaten by their benchmark over any single year can fluctuate between each SPIVA report, the long-term trend has always persisted. No active fund category in the SPIVA Europe Year-End 2017 Scorecard had a majority of outperforming active funds when measured over a 10-year period.
2. Funds have consistently struggled to survive across most fund categories.
Underperforming funds may eventually face closure. The survivorship rates show us that active funds have steadily disappeared over time. The charts clearly show how the rate of survivorship across many fund categories was surprisingly similar.
3. Outperforming fund categories have reduced over longer time periods.
Just 9 out of 23 active fund categories across the European-domiciled equity funds analyzed were able to provide average asset-weighted returns above their corresponding benchmarks over a 10-year period. By cross-checking each of these nine fund categories with the SPIVA Europe Scorecard, we can see that within each, less than a third of funds beat the benchmark. The success of a minority of funds was therefore responsible for lifting the average.
Within the pages of the SPIVA Europe Scorecard, the relative performance and survivorship of active funds across multiple time periods and multiple fund categories are measured against the performance of their respective S&P DJI benchmark indices. To find out more, please see the latest SPIVA Europe Year-End 2017 Scorecard.The posts on this blog are opinions, not advice. Please read our Disclaimers.