Jan. 18, 2005 — Benchmark indices outperformed actively managed mutual funds in all but one style box in 2004, according to data from Standard & Poor’s Indices Versus Active Funds (SPIVA) Scorecard.
Active funds lagged their respective benchmarks in eight out of nine investment styles for the year, the exception being large-cap growth. S&P stated that the results are in contrast to 2003, where a majority of actively managed funds outperformed indices in five out of nine style boxes; indices outperformed active funds in three; and one category resulted in a tie.
SPIVA’s data for 2004 revealed that the S&P Composite 1500 Index outperformed 51.4% of actively managed domestic equity funds; the S&P 500 outperformed 61.6% of actively managed large-cap funds, the S&P MidCap 400 outperformed 61.8% of actively managed mid-cap funds; and the S&P SmallCap 600 outperformed 85.0% of actively managed small-cap funds.
“In the fourth quarter of 2004, the S&P 500 Index returned 9.23%, representing 85% of the total return for the year (+10.87%),” says Rosanne Pane, mutual fund strategist at Standard & Poor’s. “The impressive rally after the election favored the growth style, and helped large-cap growth funds outperform their index for the year.”
S&P also noted that longer-term results are consistent with past results. Over the past three years, the S&P Composite 1500 has outperformed 59.9% of all domestic equity funds; the S&P 500 outperformed 68.9% of large-cap funds; the S&P MidCap 400 outperformed 79.1% of mid-cap funds; and the S&P SmallCap 600 outperformed 76.8% of small-cap funds.
Similarly, over the past five years, indices outperformed 56.4% of all domestic equity funds, 58.7% of large-cap funds, 84.2% of mid-cap funds, and 72.4% of small-cap funds.
SPIVA’s research also indicated that mergers and liquidations of funds slowed down in 2004. About 5.2% of general equity funds merged or liquidated in 2004, compared to 7.4% in 2003. “In addition, mutual funds were also more style consistent, with 88.8% of funds staying in their investment style in 2004, compared to 72.2% in 2003,” said Srikant Dash, index strategist at Standard & Poor’s.
The complete 2004 SPIVA scorecard is available at www.spiva.standardandpoors.com.
Percentage of Active Funds Outperformed by Relative Benchmark During 2004 and 2003
|Fund Category||Comparison Index||2004||2003|
|All Domestic Funds||S&P SuperComposite 1500||51.4||47.7|
|All Large-Cap Funds||S&P 500||61.6||64.6|
|All Mid-Cap Funds||S&P MidCap 400||61.8||56.4|
|All Small-Cap Funds||S&P SmallCap 600||85.0||38.8|
|Large-Cap Growth Funds||S&P/BARRA 500 Growth||39.5||44.7|
|Large-Cap Blend Funds||S&P 500||66.9||66.0|
|Large-Cap Value Funds||S&P/BARRA Value||83.3||78.5|
|Mid-Cap Growth Funds||S&P/BARRA MidCap 400 Growth||59.6||31.7|
|Mid-Cap Blend Funds||S&P MidCap 400||51.8||50.0|
|Mid-Cap Value Funds||S&P/BARRA MidCap 400 Value||63.6||81.9|
|Small-Cap Growth Funds||S&P/BARRA 600 SmallCap Growth||93.6||35.3|
|Small-Cap Blend Funds||S&P SmallCap 600||82.9||33.3|
|Small-Cap Value Funds||S&P/BARRA 600 SmallCap Value||77.5||49.3|
Source: Standard & Poor’s.
Contact Bob Keane with questions or comments at: firstname.lastname@example.org.