Podcast Center
Video Center
Webcasts
Resource Center
Events
September 25, 2017 at 10:03 AM
Actively managed funds staged a strong comeback in the 12 months ended June 30, with roughly 52% of all domestic equity funds outperforming the S&P Composite 1500 index.
That may not seem like much, but it’s more than three times the percentage of outperformers over the previous three, five, 10 and 15 years, according to the latest SPIVA (S&P Indices Versus Active) report from S&P Dow Jones Indices.
(Related: Active Funds Are Performing Better — for Now)
Two primary factors underpinned the improved performance of actively managed funds in the latest SPIVA report, according to authors Aye Soe and Ryan Poirier: managers matching or overweighting tech stocks, which have been the primary drivers of the stock market rally, and strong stock selection, especially in the first half of 2017, beyond tech. The trailing one-year performance through June 2017 also had the advantage of excluding the weak performance during the first half of 2016.
(Related: 2 Key Times to Invest in Actively Managed Funds)
“If information technology continues to play a big role in the market rally — it was the biggest driver of returns and biggest weight in the benchmark — and managers continue with that allocation, it’s possible that in the short run active managers will be keeping pace with their benchmark or perform better,” said Soe, managing director, global research & design at S&P Dow Jones Indices.
(Related: Advisors Sticking With Active Investments: Practical Perspectives)
But she cautioned that the latest performance numbers are merely a “12-month phenomenon,” and the majority of actively managed funds underperformed their respective benchmark index over 3, 5, 10 and 15 years. “This has happened before,” said Poirier, a senior analyst.
In the latest analysis, 50% or more of actively managed U.S. equity funds in five categories outperformed their respective indexes: large-cap growth, mid-cap growth, small-cap growth, multi-cap value and real estate. Large-cap growth funds led, with roughly 62% of funds in that category outperforming the S&P 500 Growth Index. The majority of small-cap international equity funds also bested their index.
Among actively managed fixed income funds, 50% or more in seven fund categories similarly outperformed: long- and short-term U.S. government funds; long, intermediate and short-term investment grade funds; global income funds; and emerging market debt funds.
