SUMMARY
- S&P Dow Jones Indices has been the de facto scorekeeper of the ongoing active versus passive debate since we first published the SPIVA U.S. Scorecard in 2002. Over the years, we have expanded the scorecard coverage into Australia, Canada, Europe, India, South Africa, Latin America, and Japan.
- The SPIVA Japan Scorecard reports on the performance of actively managed Japanese mutual funds against their respective benchmark indices over 1-, 3-, 5-, and 10-year investment horizons.
- In this scorecard, we evaluated the returns of more than 829 Japanese large- and mid-/small-cap equity funds, along with more than 703 international equity funds investing in global, international, and emerging markets, as well as U.S. equities.
- Benchmark indices for the domestic and foreign equity markets recovered in the first half of 2019; however, the Japanese large-cap funds and the majority of foreign equity fund categories recorded lower equal-weighted average returns than their respective benchmarks.
- There was no consistent trend in the yearly active versus index figures, but we have consistently observed underperformance for the majority of Japanese active funds in most categories over the 10-year period.
- Domestic Equity Funds: In the 12-month period ending June 2019, the S&P/TOPIX 150 and the S&P Japan MidSmallCap lost 5.6% and 11.7%, respectively. Over the same period, 93% and 69% of large- and mid-/small-cap equity funds underperformed their respective benchmarks, with average losses of 10.4% and 13.4%, respectively.
Over the 10-year horizon, more than 70% and 50% of large- and mid-/small-cap funds underperformed their benchmarks, respectively, on absolute and risk-adjusted bases. Nevertheless, the equal- and asset-weighted fund returns of the mid-/small-cap funds exceeded their respective benchmarks’ returns over the same period.
Compared with the benchmark indices, the domestic equity funds performed better than the foreign equity funds over the longer periods, and domestic equity funds also had a lower liquidation rate than foreign equity funds. - Foreign Equity Funds: Over the 12-month period ending June 2019, emerging market equity funds recorded the best relative performance among all the foreign equity fund categories, with more than half of funds outperforming the S&P Emerging BMI. However, a majority of funds in the remaining foreign equity fund categories failed to beat the benchmark indices, and they recorded a lower average return than the benchmark.
Over the 10-year period, the majority of funds underperformed their respective benchmarks across various foreign fund categories. Less than 15% of foreign equity funds survived and outperformed their respective benchmarks on absolute and risk-adjusted bases. More than 40% of foreign equity funds were merged or liquidated over the 10-year period.
