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S&P: Most European active equity funds lag benchmarks over 10 years


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S&P: Most European active equity funds lag benchmarks over 10 years

The majority of active fund categories in Europe underperformed their corresponding benchmarks over the past 10 years and only nine out of 23 active fund categories generated above-average asset-weighted returns, according to the latest S&P Indices Versus Active Funds, or SPIVA, Europe Scorecard.

U.S. and emerging market equity funds domiciled in Europe continued to be the region's worst-performing categories, S&P said.

More than half of active pan-European equity funds denominated in euros outperformed the benchmark over a one-year period, but only 15% of funds were able to beat the S&P Europe 350 over the 10-year period. About 26% of actively managed funds investing only in eurozone equities outperformed the S&P Eurozone BMI in 2017 and that percentage dropped to 12% over the 10-year period.

The majority of funds in Italy, Switzerland, Germany, the U.K. and Sweden outperformed their benchmarks over a one-year period. However, a majority of funds did not outperform in a single category over the 10-year period.

The performance of U.K. small-cap equity funds was markedly better than their large- and mid-cap counterparts in 2017. But less than one-quarter of the funds in both categories outperformed their benchmarks.

The SPIVA Europe Scorecard measures the performance of actively managed European equity funds against the performance of their respective S&P DJI benchmark indexes.

European equity markets achieved above-average gains in 2017 and international markets experienced strong bull rallies, supported by continued global expansion throughout the year, S&P said.

The S&P Europe 350 was 10.75% higher at the end of the year as market volatility remained low, suggesting investors were confident about Europe's economy. The S&P Global 1200 ended the year 8.57% higher and the S&P 500 finished the year up 7.01% in euro terms. The broad emerging equity benchmark posted a one-year return of 21.12% in euro terms, as measured by the S&P/IFCI.

But European investors holding global and U.S. equities experienced lower returns due to weakening of the U.S. dollar, S&P said.

S&P Dow Jones Indices and S&P Global Market Intelligence are owned by S&P Global Inc.