Standard & Poor's latest scorecard for how the returns of its benchmark indexes fared against those of active U.S. mutual fund managers should encourage proponents of passive management, according to a company announcement Wednesday.
Standard & Poor's Indices Versus Active funds scorecard showed S&P's large-cap, midcap and small-cap indexes posting gains for the three-year period ended June 30, that outpaced 64%, 75% and 63% of actively managed funds, respectively, in those market segments, on an equal-weighted basis.
For the five years through June 30, the S&P indexes outpaced 61%, 79% and 61% of respective actively managed small-, mid- and large-cap funds. For the year, the S&P large-cap and midcap indexes outpaced 60% and 67% of their respective actively managed funds, while the S&P small-cap index outperformed only 47% of actively managed small-cap funds, on a equal-weighted basis.
In a telephone interview, Srikant Dash, managing director, channel management, with S&P Indices, said the latest results were in line with historical trends over the SPIVA scorecard's 10-year lifespan, which show wide disparities in one-year results but consistent strength for passive strategies over periods of three to five years.
On an asset-weighted basis, actively managed value and small-cap equity funds posted some of the strongest results.
For example, actively managed large-cap value equity funds outperformed the S&P 500 Value index by just more than one percentage point annualized for the three years ended June 30, and by just less than two percentage points for the five-year period. For the year, the S&P 500 Value index returned 27.89%, while asset-weighted actively managed large-cap value equity funds returned 27.66% even as large-cap growth and core managers underperformed their respective S&P indexes for the one-, three- and five-year periods.
Actively managed small-cap value equity funds, meanwhile, outperformed the S&P SmallCap 600 Value index for the one-, three- and five-year periods through June 30, while core managers trailed their index for all periods and growth managers outperformed for the 12 months through June 30, but lagged for the three- and five-year periods.
The SPIVA scorecard showed the strength of passive strategies extending to overseas markets as well, with S&P's respective indexes outpacing 57% of global funds, 64% of international funds and 81% of emerging markets funds for the past three years.