The short-term 12-month comeback that actively managed equity funds staged through the end of the first half of 2017 appears to have disappeared six months later according to the latest S&P Dow Jones Indices Versus Active (SPIVA) report.
For all of 2017, only 37% of all domestic actively managed stock funds outperformed the S&P Composite 1500 index compared to roughly 52% in the first half of the year.
Growth funds, however, were an exception. More than half of all growth funds outperformed their respective indexes in 2017, including over 80% of small-cap and mid-cap funds. The comparison number for large-cap growth funds was 67%.
Those results “highlight the cyclicality of style-box investing, as core managers outperformed 12 months prior with the exception of small caps, while value managers outperformed core and growth 18 months prior,” according to the SPIVA report.
But style-box investing doesn’t explain another finding in the report for small- and large-cap growth fund performance, namely the unusually large gap between the actual performance of those funds versus their respective indexes.
For the one year ended December 31 small-cap and mid-cap growth funds gained 25% each while their respective indexes rose just 15% and 20%, respectively. Those caps can probably be explained by the style shift of these funds, toward large-cap growth, says Ryan Poirier, a senior analyst at S&P Dow Jones Indices and one of the co-authors of the SPIVA report.
Large-cap growth stocks gained almost 31% for the year, about three percentage points more than the S&P 500 growth index.