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SPIVA® Australia Scorecard

The Results Are In

SUMMARY

  • S&P Dow Jones Indices has been the de facto scorekeeper of the ongoing active versus passive debate since the first publication of the SPIVA U.S. Scorecard in 2002. Over the years, we have built on our 16 years of experience publishing the report by expanding scorecard coverage into Australia, Canada, Europe, India, Japan, Latin America, and South Africa.
  • The SPIVA Australia Scorecard reports on the performance of Australian active funds against their respective benchmark indices over 1-, 3-, 5-, 10-, and 15-year periods.[1] In this scorecard, we evaluated returns of over 854 Australian equity funds (large, mid, and small cap, as well as A-REIT), 436 international equity funds, and 116 Australian bond funds.
  • Benchmark indices for all fund categories rebounded in the first half of 2019, though the majority of funds in all categories failed to deliver better returns than their respective benchmark indices, and they recorded smaller average returns than their respective benchmarks.
  • There is no consistent trend in the yearly active versus index figures, but we have consistently observed underperformance for the majority of Australian active funds in most categories over the longer periods (5-, 10-, and 15-year periods).
    SPIVA Australia Mid-Year 2019 Exhibit 1
  • Australian Equity General Funds: The S&P/ASX 200 had a strong rebound in the first half of 2019, however the majority of Australian large-cap equity funds delivered smaller returns than the benchmark. In the 12 months ending June 2019, Australian large-cap equity funds recorded an average return of 6.3%, well below the gain of 11.6% by the S&P/ASX 200.  Of the funds in this category, 93.2% and 96.3% failed to outperform the benchmark on absolute and risk-adjusted bases, respectively.
  • Australian Equity Mid- and Small-Cap Funds: The S&P/ASX Mid-Small gained 2.9% in the 12 months ending June 2019, while the Australian mid- and small-cap funds recorded a smaller average return of 1.8%, with 60.5% of funds in this category failing to beat the benchmark on both absolute and relative bases over the same period. Over the 5- and 10-year periods, 75.2% and 46.7% of funds underperformed the S&P/ASX Mid-Small on an absolute basis, respectively.
  • International Equity General Funds: The international equity market also enjoyed a strong rebound in the first half of 2019. In the one-year period ending June 2019, the S&P Developed Ex-Australia LargeMidCap gained 12.1%, while international equity funds marked an average gain of 9.2%, with 72.9% of funds underperforming the benchmark.  Over the 5- and 10-year periods, about 82.8% and 92.1% of funds underperformed the S&P Developed Ex-Australia LargeMidCap, respectively.
  • Australian Bond Funds: The S&P/ASX Australian Fixed Interest 0+ Index recorded a gain of 9.5% in the one-year period ending June 2019, while Australian bond funds gained 7.9% and 7.3% on equal- and asset-weighted bases, respectively. On an absolute basis, 84.6% of Australian bond funds underperformed the benchmark, while only 69.2% of funds underperformed on a risk-adjusted basis.  Over the 10-year period, 72.4% and 60.3% of funds underperformed the S&P/ASX Australian Fixed Interest 0+ Index on absolute and risk-adjusted bases, respectively.
  • Australian Equity A-REIT Funds: The S&P/ASX 200 A-REIT posted a strong one-year return of 19.3% as of June 2019. Within the Australian A-REIT fund category, 71.8% of funds posted a smaller gain than the benchmark, with equal- and asset-weighted average returns of 14.4% and 13.9%, respectively.  Over the 5- and 10-year periods, over 80% of funds underperformed the S&P/ASX 200 A-REIT on an absolute basis.
  • Fund Survivorship: In the 12 months ending June 2019, 5.5% of Australian funds from all measured categories were merged or liquidated, with Australian A-REIT funds recording the highest survival rate of 97.2%. In contrast, more than 6% of funds from the Australian Equity General and Australian Equity Mid- and Small-Cap categories disappeared over the same period.  Over longer horizons, only 78.5%, 59.6%, and 52.9% of funds across all categories survived the 5-, 10-, and 15-year periods, respectively.
  • Average Fund Returns: Funds in the Australian Equity General and International Equity General categories recorded lower equal-weighted than asset-weighted returns across all measured periods, indicating funds with larger assets tended to perform better than their peers with smaller assets. In contrast, smaller funds in the Australian Equity Mid- and Small-Cap category tended to deliver better performance than those with larger assets.

[1]   The fund returns used are net of fees, excluding loads.

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