July 10, 2003 — The majority of actively managed small-cap mutual funds beat their benchmark, the S&P SmallCap 600, in the second quarter of 2003, according to Standard & Poor’s data.
Specifically, 59.6% of active small-cap funds came out ahead of the index. However, actively managed mid-cap and large-cap funds did not do as well: 56.2% of active large-cap funds lost to the S&P 500, while 56.6% of actively managed mid-cap funds lost to the S&P MidCap 400 index.
As the S&P 500 index notched its best quarterly performance since the last quarter of 1998, all nine general equity styles and eight equity sectors tracked by Standard & Poor’s Indices Versus Active Funds Scorecard (SPIVA) showed double-digit positive returns both on an asset- and equal-weighted basis.
Actively managed large-, mid-, and small-cap growth funds turned in a notable second quarter, outperforming their relevant indices by 70.7%, 64.7%, and 81.3% respectively. However, the reverse was true for value funds, Standard & Poor’s data showed.
“If you look back at the 1990 recession, one of the key indicators that suggested we were emerging out of the recession was that growth funds were outperforming value and blend,” noted Phil Edwards, managing director of funds research at Standard & Poor’s. “This is exactly what the market is witnessing today. Investors are anticipating the start of a recovery, they are becoming more optimistic about future earnings announcements, and are starting to shift assets into equities.”