Actively managed domestic equity mutual funds underperformed their benchmarks for the past five years, according to Standard & Poor's Index vs. Active Fund Scorecard released today.
For the five-year period ended June 30, the S&P 500 index outperformed 62.9% of active U.S. large-cap funds, while the S&P MidCap 400 topped 73.4% of domestic midcap funds and the S&P SmallCap 600 outperformed 57.4% of U.S. small-cap funds, according to the report.
The report noted, however, that asset-weighted averages “suggest a more level playing field, with active managers level or ahead of benchmarks in most categories.”
For example, U.S. large-cap equity funds posted an asset-weighted average return of -1.87% for the five years ended June 30, while the S&P 500 returned -2.25%. Domestic midcap equity funds returned an asset-weighted average of 0.12% for the same period, compared with 0.37% for the S&P MidCap 400 index. And small-cap equity funds returned an average -0.92%, compared with the S&P SmallCap 600's -0.9%.
Actively managed fixed-income funds fared much worse: Excluding emerging market debt, more than 75% of active managers failed to reach their fixed-income benchmarks, the report said. Five-year asset-weighted average returns were also lower for active funds than their benchmarks in most categories, according to the report.