Actively Managed Mutual Funds Make ETFs Look Good By Underperforming
March 8th at 1:00am by Tom Lydon
Actively managed mutual fund enthusiasts say that a bear market is where active stock picking can beat index funds or exchange traded funds (ETFs).
Jonathan Chevreau for Financial Post takes a look at the Standard & Poor’s Indices Versus Active Funds (SPIVA) scorecard, which seems to indicate that it isn’t so.
Only 24.3% of actively managed Canadian equity funds outperformed the S&P/Toronto Stock Exchange (TSX) composite index in 2007, while only 37% of beat the S&P/TSX Canadian Dividend Aristocrats Index. Out of five years, only 10% of actively managed Canadian equity funds beat the TSX, while over 3 years only 13.3% did so.
Canadian small-mid caps did capture some fame with actively managed stock picking coming out ahead. In 2007, 51.8% of Canadian small-mid-cap equity funds did manage to beat the S&P/TSX Completion Index.
In the United States, it isn’t much better: actively managed U.S. and international equity funds also performed poorly against the indexes. Over 5 years, only 13.1% of international equity funds beat the index, while 14.9% of U.S. equity mutual funds did so.
Ouch. If you can’t beat the market, why don’t you just buy the market?
