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Aug 03

Another blow for active managers

Following the APRA report from a few weeks ago, late last week Standard and Poors published a paper that wasn’t too flattering of the active side of the Australian funds management industry. The paper can be found here.

Their analysis had the following conclusions:

  • Over 5 years, the benchmarks outperformed the majority of active managers
  • ASX/S&P200 index outperformed two-thirds of active Australian general equity funds
  • UBS Composite 0+ Bond index outperformed more than 97% of actively managed bond funds over the last 5 years
  • Between 10% to 30% of all funds have disappeared over the last 5 years

A fascinating, but unsurprising result of which most in fund research or academia have known for a long time. The most surprising result is that it has come from Standard and Poors who are potentially damaging their own business (albeit in a very small way) by suggesting that active management, on average, fails.

I guess Standard and Poors will be suggesting that it requires their skill to pick the best managers!!!

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