Tag Archives: active underperformance
SPIVA Canada Scorecard 2022: Country, Currency and Concentration Contexts
Since 2004, our SPIVA® Canada Scorecards have shown that a majority of actively managed Canadian equity funds typically underperform the S&P/TSX Composite Index. However, according to the recently published SPIVA Canada Year-End 2022 Scorecard, the annual underperformance rate dropped to the best result we have seen since 2015: just 52% of Canadian Equity managers lagged…
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Active Ability versus Active Outperformance
Some commentators have argued that today’s market environment—characterized by rising rates and economic growth concerns—is a ripe environment for stock pickers. This argument is conditionally correct, as long as we remember that having the opportunity to add value does not guarantee that value gets added. In today’s environment, active managers have good potential to add…
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Shooting Hoops with Michael Jordan: An Allegory
I am not a particularly good athlete, and perhaps the sport at which I am most inept is basketball. Despite that, let’s assume that I somehow challenge Michael Jordan, arguably the best player in the history of the game, to a free throw shooting contest. What are my chances of success? (Stay with me, I…
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Growth Managers’ Perfect Storm
Anyone familiar with our SPIVA reports will realize that most active managers fail most of the time. In 21 years of SPIVA data, a majority of large-cap managers underperformed the S&P 500 18 times; the most recent of the three exceptions came in 2009. Even in that context, 2021 was a year of above-average difficulty,…
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The Odds Are Against You
S&P Dow Jones Indices’ SPIVA (S&P Index Versus Active) scorecard, first published in 2002, has become our industry’s de facto scorekeeper of the relative performance of active managers. We recently released the U.S. SPIVA results for 2021. Nothing in the 2021 report was surprising, as most active managers continued to underperform benchmarks appropriate to their…
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Did Latin American Active Managers Outperform in This Tumultuous Time?
Low volatility and dispersion make it harder for active managers to add value. In other words, high volatility and high dispersion environments are expected to favor active managers to demonstrate their skill. In this aspect, March 2020 offered an opportunity to active managers[1] across the world, including in Latin American equity markets. High dispersion and…
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Viewing 20 Years of Indexed Core Assets Growth through a SPIVA® Lens
In 1973, Princeton professor Burton Malkiel wrote the book, A Random Walk Down Wall Street, laying out a case against the mutual funds of the time as persistently underperforming market indices. Malkiel recommended[i] that the New York Stock Exchange create a fund that simply bought and held stock in the companies comprising the indices. Somewhat…
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Active Management Underperformance in 2016 Generally Higher Than in Previous Years
European equity markets, as measured by the S&P Europe 350, went up 3.44% in 2016, yet the average performance of active managers invested in Europe was negative, whether measured on an asset-weighted or equal-weighted basis. Over the one-year period, more than 80% of active managers invested in European equities underperformed their respective S&P DJI benchmark….
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The Rest of the Story
This morning’s Wall Street Journal offered a partial explanation for the failure of most active managers to outperform their cap-weighted index benchmarks in 2014. The proffered explanation is that “the rally in U.S. stocks was generally led by giant-company shares, such as Apple Inc., which rose 40%.” Since most active funds are underweight most mega-cap…
- Categories Equities, S&P 500 & DJIA, Strategy
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