Actively managed mutual funds in the Canadian equity, Canadian small-cap, and U.S. equity fund categories lagged indices in the first half of 2006, Standard & Poor’s Corp. revealed on Thursday.
According to the S&P Indices vs Active Funds Scorecard (SPIVA) for Canada, the S&P/TSX composite iIndex outperformed 81.2% of Canadian equity funds through June, while the S&P 500 index outperformed 61.4% of U.S. equity funds. In a reversal from the last few quarters, only 48.4% of Canadian small-cap equity funds beat the S&P/TSX small-cap index.
Over longer time periods, S&P continues to observe indices outperforming a majority of active funds. Over the past five years, 13.9% of Canadian equity funds have outperformed the S&P/TSX composite index, 43.8% of Canadian small-cap funds have beaten the S&P/TSX small-cap index, and 25% of U.S. equity funds have outperformed the S&P 500 index.
Five-year average fund returns show active funds underperforming the S&P/TSX composite index and the S&P/TSX capped composite, both on an equal- and asset-weighted basis. Canadian small-cap equity funds fared better over this time frame outperforming the S&P/TSX small-cap index.
“Active managers are having a hard time in this year’s volatile markets,” said Jasmit Bhandal, director of business development at S&P Canadian index services. “In particular, there has been a shift in the small-cap space, where over the last few quarters we had seen active managers adding value above and beyond the index. Year-to-date, fewer active small-cap funds have been able to beat the index.”
Indices lead Canadian active funds in first half of 2006
Latest SPIVA scorecard shows only 48.4% of Canadian small-cap funds beat the index
- By: IE Staff
- August 24, 2006 August 24, 2006
- 14:13