- What is SPIVA® and why did S&P DJI start putting these reports out 20 years ago?
Tim: “SPIVA” stands for “S&P Indices Versus Active,” and it is the name for a regular series of research reports that compare the performances of actively managed funds to appropriate benchmarks. The primary role of the SPIVA Scorecards is to help inform a sometimes unfortunately noisy debate over the relative merits of active and passive investing. The scorecards do this by providing data on where (and when) actively managed funds have been performing well (or poorly), over both short- and long-term horizons, in various markets around the world—as well as offering a range of deeper statistics and analysis on active fund performance.
- How do we ensure that the SPIVA report isn’t biased considering it’s coming from an index provider?
Tim: One important thing to mention is that we don’t just publish the results when they suit us, instead sticking to a predetermined calendar (which is in most cases semiannual). There have been, and perhaps will be again, years when a majority of actively managed U.S. equity funds outperformed the S&P 500®. We’ll report it when they do. More generally, the SPIVA Scorecards frequently acknowledge outperformance in individual fund categories: particularly over short-term horizons, there are usually plenty of examples to be found in the range of global reports. I’d add that, from a practical perspective, the scorecards are based on publicly available data, with a fully disclosed methodology—an interested third party can check our results, and sometimes they do.
Craig: Any analytic effort, SPIVA included, is no better than the data on which it is based, and we source our data carefully. But ours is by no means the first or only study to examine similar data and reach similar conclusions. The first study of active management versus indices of which we’re aware was published 90 years ago. Its conclusion would sound familiar to any reader of our current SPIVA reports: “Statistical tests of the best individual records failed to demonstrate that they exhibited skill, and indicated that they more probably were results of chance.”
- How has the report evolved over the past 20 years?
Craig: SPIVA has broadened its coverage considerably. Our first SPIVA report was U.S.-centric, and it covered only 12 comparison categories (large-, mid- and small-cap; growth, value, blend and all styles). Since then, SPIVA has expanded to 9 different geographies, and now reports on the performance of over 100 different active fund categories around the world.