Since the first publication of the S&P Indices Versus Active Funds (SPIVA) U.S. Scorecard in 2002, S&P Dow Jones Indices has been the de facto scorekeeper of the ongoing active versus passive debate.
The SPIVA MENA Scorecard measures the performance of actively managed MENA equity funds against their respective benchmarks over various time horizons, providing statistics on outperformance rates, survivorship rates and fund performance dispersion.
MID-YEAR 2022 HIGHLIGHTS
MENA equities plummeted in Q2, but managed to post slight YTD gains thanks to a stellar Q1, led in particular by the S&P Pan Arab Composite LargeMidCap Index. The majority of funds across all categories outperformed their respective benchmarks, with just 27% of MENA Equity funds underperforming the broad S&P Pan Arab Composite (see Exhibit 1).
- For MENA Equity funds, 32% underperformed the S&P Pan Arab Composite LargeMidCap Index during the first half of 2022, while 27% underperformed the broader S&P Pan Arab Composite.
- Fewer funds were able to maintain their record of outperformance over the 10-year period, with 91% of funds underperforming both benchmarks.
- Funds in this category gained 6.76% and 8.33% on an equal- and asset-weighted bases, respectively, over a 10-year period, implying that larger funds performed relatively better than smaller funds on average.
- Only 40% of the funds analyzed within the MENA Equity fund category survived the 10-year period.
- Equity funds focused on the Gulf Cooperation Council (GCC) region fared similarly, with 37% underperforming the S&P GCC Composite over the six-month period.
- Underperformance rates peaked over the five-year period, at 96%.
- Smaller funds performed relatively better than larger funds over the 1-, 3-, 5-, and 10-year periods.
- For the six-month period, 31% of Saudi Arabia Equity funds underperformed the S&P Saudi Arabia.
- Some funds will always do better than average, and others worse, but fund selection risk was particularly heightened among Saudi funds, with an interquartile range of 12% among one-year fund performances.
- The survival rates of active funds in Saudi Araba were the highest among all categories, with 85% of funds surviving over the 10-year period.