Summary
The S&P Indices Versus Active (SPIVA) Latin America Scorecard measures the performance of actively managed funds across Brazil, Chile and Mexico against their respective benchmarks over various time horizons, providing statistics on outperformance rates, survivorship rates and fund performance dispersion.
Year-End 2023 Highlights
In a year of recovery and double-digit positive performance across Latin American benchmarks, underperformance rates among active managers significantly varied by country and asset class. Managers of equity funds in Chile and corporate bond funds in Brazil fared better than most, with less than one-half of funds underperforming their benchmarks. In all other categories, the majority of active funds underperformed in 2023 and over longer periods (see Exhibit 1).
Mexico
- The S&P/BMV IRT gained 22.7% during calendar year 2023. In a dramatic reversal compared to 2022, the vast majority of active Mexico Equity fund managers (90.7%) underperformed for the one-year horizon. Over longer periods, outperformance remained challenging, with 79.1%, 77.8% and 87.8% of managers underperforming the benchmark over 3-, 5- and 10-year periods, respectively (see Report 1a).
- The median active fund return trailed the benchmark by 5.3% in 2023, worse than in longer periods; median funds underperformed by 3.8%, 3.0% and 2.7% for the 3-, 5- and 10-year periods, respectively (see Reports 3 and 5). Over the 10-year period, even the threshold for top-quartile managers lagged the benchmark by 1.4%.
- The survival rates of active funds in Mexico remained the highest in Latin America, at 100.0%, 100.0%, 91.1% and 78.0% over the 1-, 3-, 5- and 10-year periods, respectively (see Report 2); this marked seven scorecards in a row that Mexico Equity funds had the highest three- and five-year period survivorship rates.
- Funds with greater assets performed significantly worse than smaller funds in 2023, with average returns for Mexico Equity funds 2.7% lower on an asset-weighted basis than on an equal-weighted basis (see Reports 3 and 4).
Brazil
- Brazil’s equity market ended 2023 sharply up, with the S&P Brazil BMI rising 25.3% (see Report 3). Large caps, as measured by the S&P Brazil LargeCap, increased 25.9%, slightly outperforming mid- and small-cap companies, as measured by the S&P Brazil MidSmallCap, which finished the year up 23.7%.
- In 2023, 61.3% of active Brazil Mid-/Small-Cap funds underperformed their benchmark, while a larger majority of active equity funds underperformed their benchmarks in other categories, with underperformance rates of 88.0% among Brazil Large-Cap funds and 82.1% for Brazil Equity funds. Active managers from all categories, with the exception of Brazil Large-Cap funds, fared even worse relative to their respective benchmarks over the longer 10-year period ending in 2023, with underperformance rates of 91.6%, 81.2% and 90.2% in the Brazil Equity, Brazil Large-Cap and Brazil Mid-/Small-Cap fund categories, respectively (see Report 1a).
