I’m quite late in reporting the recent performance of fund managers from my favourite performance report, Standard and Poor’s SPIVA. For those that don’t know the reason why this is my favourite report on fund manager performance is that it considers survivorship. It does this by examining all fund managers at the start of the reporting period, as opposed to the Mercer, Morningstar, and other performance surveys who look at performance of the fund managers who are still around at the end of the reporting period, which excludes managers who have blown up, experienced high levels of redemptions, or failed to attract sufficient funds and closed.
Anyway, the table above shows the proportion of fund managers who have failed to outperform standard benchmarks of their respective asset class.
Over the 12 months to 30 June 2011, once again only small cap Australian equity managers have more than 50% of managers outperforming their index.
The most interesting result is that more than 50% of both Australian Equity General and A-REIT managers have outperformed over the last 3 years. Unfortunately for them the 5 year results are quite dismal with more than 70% and 60% respectively underperforming their respective index.
As expected, Australian bond managers have the most trouble outperforming the UBS Composite index and despite the yield curve changing shape numerous time the past 5 years and the same with credit spreads, active managers have consistently struggled.
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» Buy-hold strategy may have had its day…I don’t think so Fureyous
January 14, 2012 at 3:47 am (UTC 10) Link to this comment
[…] Whilst there is a little bit if truth in each of the above statements, unfortunately the main reason behind the buy-hold strategy is ignored altogether. That is, that timing markets is very very hard and after transaction costs and potentially other costs are taken into account, there is more evidence to suggest that buy-hold is a far more successful method of achieving sharemarket returns than active management. This belief has the foundation in numerous academic articles, most notably Brinson, Beebower and Hood’s “Determinant of Portfolio Performance”, and the consistent failure of active managers to outperform benchmarks (see recent SPIVA results). […]