The recently published SPIVA® Latin America Year-End 2020 Scorecard shows that the volatile environment of 2020, though potentially favorable for high-conviction active managers, did not necessarily translate into success for active managers.
SPIVA scorecards measure the performance of active funds against an appropriate benchmark. For Latin America, S&P Dow Jones Indices began publishing the scorecard in 2014, covering Brazil, Chile, and Mexico.
As of year-end 2020, all categories across all three countries underperformed their benchmarks over the 1-, 3-, 5-, and 10-year periods. These results contrasted those of the SPIVA Latin America Mid-Year 2020 Scorecard, in which Brazilian active managers in the Brazil Equity Funds, Brazil Large-Cap Funds, and Brazil Corporate Bond Funds categories managed to take advantage of the circumstances and outperform over the one-year period (see Exhibit 1).
Median fund managers across all the categories in the report underperformed their benchmarks over 1-, 3-, 5-, and 10-year periods (see Exhibit 2). However, in five out of seven categories, active managers in the first quartile beat their benchmarks over the one- and three-year periods (see Exhibit 3). Top-performing managers in the Brazil Equity Funds category were even able to outperform over the 10-year period.
As evidenced by SPIVA scorecards, the majority of active managers underperform most of the time, especially across the long-term time horizon. Is outperformance luck or skill? Stay tuned for the upcoming Latin America Persistence Scorecard.The posts on this blog are opinions, not advice. Please read our Disclaimers.