Industry Updates

Over 80% of active global equity funds underperform in 2023, SPIVA Europe finds

Some 71% of active US equity funds failed to beat flagship benchmark

Lauren Gibbons

Global world

Over four-fifths of actively managed global equity funds trailed behind the S&P World index last year, highlighting the well-documented challenges active managers face when aiming to beat their benchmarks.

According to the S&P Dow Jones Indices’ SPIVA Europe scorecard, 84% of actively managed global equity funds failed to beat the S&P World index.

In European equities, 83% of euro-denominated pan-European equity funds fell short of the S&P Europe 350 benchmark annually.

Longer-term results were even less favourable, with underperformance rising to 90% over five years and 92% over 10 years.

Active US equity funds also fell short, with 71% not meeting the S&P 500's returns in one year. This underperformance has increased over time, reaching 93% in five years and 98% in 10 years.

This was the third-highest ranking underperformance over a 10-year period, behind Nordic and Denmark equity funds.

Similarly, performance was subdued in other categories – 58% of UK equity funds underperformed the S&P United Kingdom BMI in one year – with an 81% underperformance over 10 years.

The underperformance of actively managed equity funds is in keeping with findings reported in the H1 2022 and 2021 SPIVA Europe Scorecard.

The former found that 96% of UK large and mid-cap equity funds underperformed the S&P UK LargeMidCap benchmark in the first half of 2022.

Meanwhile, the 2021 report found that half of all global, US, Europe and UK equity funds have shut over the last 10 years, with only 50.4% of euro-denominated global equity funds surviving between 2011 and 2021.

While underperformance has been consistent across equities, fixed income funds varied across categories and currencies, with many active managers outperforming.

The majority of euro-denominated corporate bond funds (53%) failed to beat the iBoxx EUR Corporates benchmark.

The trend was more pronounced in high yield (67%) and government bond (82%) categories in euros.

In contrast, only 24% of UK corporate bond sterling funds underperformed while 79% of US-based global corporate bond US dollar funds failed to meet their benchmarks.

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