Since its first publication in the U.S. in 2002, the S&P Indices Versus Active (SPIVA) Scorecard has served as a de facto scorekeeper of the ongoing active versus passive debate.
The SPIVA MENA Scorecard extends this analysis to the Middle East/North Africa region by measuring the performance of actively managed MENA equity funds against their respective benchmarks over various time horizons, providing data on outperformance rates, survivorship rates, and fund performance dispersion.
Mid-Year 2023 Highlights
After falling in 2022, the region’s markets recovered in the first half of 2023. For example, the S&P Pan Arab Composite, which had declined by 5.7% last year, rose by 5.4%. This first half of the year was a relatively favorable environment for active management in the region, as only a minority of active managers underperformed. As Exhibit 1 illustrates, active performance was especially strong in Saudi Arabia, where no managers lagged the benchmark.
- 22% of MENA equity funds underperformed the S&P Pan Arab Composite in the first six months of 2023, while only 4% underperformed the S&P Pan Arab Composite LargeMidCap Index. (In this period, the largemidcap index gained 2.8% versus 5.4% for the composite, making it an easier target to beat.) MENA funds averaged returns of 10.2% (equal-weighted) and 11.1% (asset-weighted).
- As is common in SPIVA analyses, as time periods lengthen, active performance worsens. Despite good recent performance, over the past 10 years, 85% (S&P Pan Arab Composite) and 88% (S&P Pan Arab Composite LargeMidCap Index) of active managers lagged their benchmarks.
- Perhaps as a result, attrition in this category was relatively high. Only 42% of the MENA funds in our database 10 years ago survive until today.
- 22% of GCC equity managers underperformed the S&P GCC Composite in the first six months of 2023. GCC active manager returns averaged 7.9% (equal-weighted) and 11.7% (asset-weighted).
- As with the MENA group, longer horizons showed worse active results. Over the past 10 years, 72% of GCC managers lagged their benchmark.
- Despite this, GCC managers’ survival rates were relatively high; 72% of the managers in our database 10 years ago are still active.
- All the managers in our Saudi Arabian category outperformed the S&P Saudi Arabia index in the first six months of the year. Their returns averaged 22.4% (simple average) and 22.5% (asset-weighted).
- As with our other categories, time is the active manager’s enemy. After 10 years, 55% of Saudi managers lagged the index.
- Saudi manager survival rates are comparatively high; 82% of the managers we tracked 10 years ago continue in our database.