Standard & Poor's latest semi-annual "persistence" scorecard of mutual fund performance showed only three of 269 large-cap mutual funds managing to deliver top-quartile performance for each of five consecutive 12-month periods through June 30. Of 76 midcap funds, none managed a similar feat, while only one of 124 small-cap funds did so.
S&P's latest study showed 58 large-cap funds, or 10.8% of the total universe of 538, delivering above-median returns for all five 12-month periods, compared with 12 of 152 midcap funds, or 7.9% of the total, and 19 of 247 small-cap funds, or 7.7%. Those figures indicate a general decline, compared with 11.7%, 10.6% and 12%, respectively, for large-cap, midcap and small-cap funds in the February study and 14.6%, 17.0% and 18.6%, respectively, for the July 2005 study, spokesman David Guarino said.
According to the latest study, 17.5% of large-cap funds with a top-quartile ranking for the five years ended June 30, 2001, maintained a top-quartile ranking for the five years ended June 30, 2006. That compares with 6.8% of midcap and 18.7% of small-cap funds.
The results point to the futility of narrowing manager searches to those who have delivered top-quartile or better returns in recent years, said Srikant Dash, index strategist at S&P. Among the managers identified as persistent outperformers, the most significant differentiating factor was manager tenure, with the winners being in the saddle on average almost twice as much as those in the broader universe, he said.