According to the latest bi-annual S&P Indices Versus Active Funds (SPIVA) Europe Scorecard, active funds investing in the UK produced an average asset-weighted return of 24.2% from mid-2016 to mid-2017, compared with a 17.6% return for the corresponding S&P United Kingdom BMI benchmark.
In the same time period just one fifth of these funds (20.4%) were beaten by their benchmark, while some 94% funds investing in UK small caps outperformed their respective benchmark (S&P United Kingdom SmallCap) after the average fund produced a 38.3% return for the year versus the mean of 22.7%.
While these short-term numbers make good reading for active funds, over longer time periods the results begin to reverse. For example, within the wider UK equity sector over 10 years just 28% of funds have managed to outperform their benchmark.
The difference is more extreme within UK smaller companies, with some 50% of funds underperforming over three years and nearly 74% not beating their index over 10.
Away from the UK, active European funds enjoyed an improved last 12 months with only 50.9% of euro-denominated funds underperforming their benchmark (S&P Europe 350). While this represents a small majority, it is far less than the equivalent 80.4% that were reported to underperform in the SPIVA Europe Year-End 2016 Scorecard.
Adding weight to the theory that active funds investing in the US are doomed to underperform over the long-term, the latest data shows that over 10 years 93.9% of sterling-denominated funds failed to outperform the S&P 500. That said, the same funds did enjoy an improved 12 months, with nearly 58% of funds beating the benchmark.
