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Mercer Report: Growth Funds Outdo Value

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Mercer’s first-quarter 2009 Defined Contribution Universe Summary found losses in all equity markets during the period. Also, during the first quarter, growth funds outperformed value funds, as the median large cap growth fund posted a loss of 4.7% compared to a loss of 12.9% for the median large-cap value fund. The Mercer study also found that the small-cap segment of the market trended in the same direction as large cap stocks, as the median small-cap growth fund outperformed the median small-cap value fund by 710 basis points.

The quarterly report analyzes returns of various funds and helps institutional investors evaluate their mutual fund managers’ performance against other funds and asset class benchmarks. Mercer provides consulting, outsourcing, and investment services.

The Mercer report also found that the median large-cap fund outperformed the S&P 500 Index by 120 basis points for the first quarter. Small-cap funds underperformed their large-cap counterparts for the quarter, as the median small-cap fund lost 12.9% for the quarter versus a loss of 9.8% for the median large-cap fund.

Within the international equity asset class, Mercer says, the median manager outperformed the MSCI EAFE Index by 130 basis points during the quarter. The median emerging markets manager lost 1.4% for the quarter and underperformed the MSCI Emerging Markets Free Index by 240 basis points.

The median core fixed income fund outperformed the Barclays Capital Aggregate Bond Index for the first quarter by 30 basis points.

Fund performance data in the Defined Contribution Universe Summary are provided at the asset class and sub-asset class level. Fund universes are courtesy of Manager Performance Analytics (MPA), Mercer’s proprietary manager database, using returns data from Morningstar, Inc.


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