Jan. 14, 2004 — Out of the nine equity investment style categories, active fund managers within five outperformed their relative indices for calendar 2003.
Of the remaining, the corresponding indices bettered active funds in three style categories, and one investment style, mid-cap blend, came in at dead heat in 2003, according to Standard & Poor’s data.
The five investment styles which triumphed over their benchmarks comprised all the growth categories and all the small-cap categories.
Specifically, in 2003, 55.3% of actively managed large-cap growth funds, 68.3% of mid-cap growth funds and 64.8% of small-cap growth funds outperformed their relative benchmarks — the S&P/BARRA 500 Growth Index, S&P/BARRA MidCap 400 Growth Index, and S&P/BARRA 600 SmallCap Growth Index, respectively.
Actively managed funds from three category styles — large-cap blend, large-cap value and mid-cap value — failed to beat their indices in a vast majority of cases.
With respect to broader investment styles for calendar 2003, the S&P 500 beat 64.6% of actively managed large-cap funds, and the S&P MidCap 400 outpaced 56.4% of actively managed mid-cap funds. However, an impressive 61.2% of small-cap active funds beat the S&P SmallCap 600 Index.
Among sector funds, active managers beat indices in seven out of eight sectors in 2003, with utilities funds being the sole exception. Indeed, 76.7% of utility funds failed to beat their benchmark for the year.
Over the longer term, the indices demonstrated a distinct advantage over actively-managed portfolios. Indeed, for the five-year period through 2003, in only one investment style (large-cap growth), did the majority of actively managed funds beat their benchmark. An impressive 54.8% of active large-cap stockpickers beat the benchmark over that period.
Active mid-cap managers did the worst over the long-term with 94.9% of mid-cap value funds underperforming their index for the five years through 2003.