More than 90% of euro-denominated active European equity funds underperformed their benchmarks in the 12 months to June despite a return to volatile markets, an environment some claim active managers do better in.
According to S&P Dow Jones Indices’ (SPDJI) mid-year SPIVA Europe scorecard, 90.2% of active Europe equity managers underperformed the S&P Europe 350 index in the year to June while 81.5% of UK equity managers failed to beat their benchmarks.
Furthermore, some 87.2% of global equity funds underperformed the S&P Global 1200 index over the year to June and 84.3% of US managers underperformed the S&P 500.
Across German funds, the majority of managers were unable to outmanoeuvre the downtrend driven by weaker global trade tensions impacting Europe’s largest exporter. Just 16.8% of managers beat the S&P Germany BMI index.
Emerging market equity was the only bright spot for active managers with over half (51.9%) beating the S&P/IFCI Composite index.
One argument made is because emerging markets are less efficient than more developed markets, active managers are able to take advantage of this discrepancy.
Andrew Innes, head of global research and design, EMEA, at SPDJI, commented: “The steep declines seen across equity markets in late 2018 were accompanied by near-ubiquitous underperformance across the fund categories’ asset-weighted returns.
“As markets improved in the first half of 2019, active managers were generally not able to make up for lost ground.”