To make matters worse, UK actively managed equity funds “fared poorly over all time horizons,” according to the S&P data.
The self-proclaimed “de facto scorekeeper of the active versus passive debate,” the SPIVA Scorecard has been charting the performance of active funds across jurisdictions against the corresponding S&P indices for 15 years.
On a three-year basis, it found that 61.64% of active UK funds slumped under the S&P UK BMI benchmark, while only half managed to outperform the index over five years.
The 10-year outlook for actively managed UK funds is even more dismal, with 74.19% failing to rise above the benchmark.
Over the year, actively managed UK large and mid-cap equity funds struggled the most to outperform their respective index; only 7.46% managed to do so.
UK small-cap funds, on the other hand, beat the S&P UK Small Cap index at a more encouraging rate of 63.08% in 2016.
Judging from SPIVA’s data for 2016, the UK active management industry is by no means unique in its shortcomings.
Measured against the S&P Europe 350, 80.41% of European equity funds missed the mark last year.
And 93.83% of sterling denominated active emerging market equity funds lost out against the S&P/IFCI benchmark in the same time frame.
Director of global research and design at S&P Dow Jones Indices, Daniel Ung, said: “There is often a widely held belief that active portfolio management can be most effective in less efficient markets, such as emerging market equities, because these markets can provide managers the opportunity to exploit perceived mispricing.
