Standard & Poor’s survey shows majority of active fund managers fail to beat benchmarks

Standard & Poor’s Index Services released today the year-end 2008 results for its Standard & Poor’s Index Versus Active Fund Scorecard (SPIVA) and it shows how the majority of active fund managers underperform benchmarks.

The SPIVA scorecard reveals quarterly performance data for U.S. equity, international and fixed income mutual funds benchmarked against appropriate asset class indices. More than 3500 actively managed funds are covered in the scorecard.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.

Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.

“The belief that bear markets strongly favor active management is a myth,” says Srikant Dash, Global Head of Research & Design at Standard & Poor’s.

“A majority of active funds in each of the nine domestic equity style boxes were outperformed by indices during the down markets of 2008. The bear market of 2000 to 2002 showed similar outcomes.”

SPIVA results show similar results for international equity and fixed income funds. Benchmark indices outperformed a majority of actively managed fixed income funds in all categories over a five-year horizon.

Five year benchmark relative shortfall ranged from 2-3% per annum for municipal bond funds to 1-5% per annum for investment grade bond funds. Among international equity funds, indices outperformed a majority of actively managed non-U.S. equity funds over the past five years in the four categories studied, including emerging market funds.