Active equity portfolio managers lagging their benchmarks: S&P report

The underperformance is taking place among domestic equity, Canadian-focused equity, international equity and global equity portfolio managers

This year’s volatile equities markets have resulted in the majority of active equity portfolio managers who invest in domestic equities faring worse than their respective benchmarks, as just 26.4% of Canadian equity funds outperformed the benchmark S&P/TSX composite index during the one-year period ended June 30, according to the S&P Dow Jones Indices SPIVA Canada Scorecard.

The one-year data from the report — which measures the performance of actively-managed mutual funds in Canada net of fees, against their respective benchmarks, for the first half of 2016 — also show unfavorable results for actively managed funds in the Canadian small-and mid-cap equity category, with only 31% of portfolio managers outperforming their benchmark, the S&P/TSX completion index.

Over the same one-year period, only 19.4% of portfolio managers in the Canadian-focused equity category outperformed the benchmark blended index, which allocates 50% of its weight to the S&P/TSX composite index, 25% of its weight to the S&P 500 composite index and 25% of its weight to the S&P EPAC LargeMidCap index.

As well, the majority of active portfolio managers in the international equity category saw their returns lag the benchmark, with 42.5% of international equity managers beating the S&P EPAC LargeMidCap index over the 12-month period ended June 30. Similarly, only 29.8% of global equity portfolio managers had higher returns than the benchmark during the same period.

The report has also found that not a single portfolio manager who invests in U.S. equity was able to deliver higher returns than the benchmark, the S&P 500, over a five-year horizon.

More information on the results of the S&P Dow Jones Indices SPIVA Canada Scorecard are available in this link.

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