In the first half of 2009, only 34.5% of Canadian Equity active mutual funds outperformed the S&P/TSX composite index, the latest results for the Standard & Poor’s Indices Versus Active Funds Scorecard for Canada show.

But the quarterly report, released on Wednesday, also revealed that 62% of active funds in the Small/Mid Cap Equity category beat the S&P/TSX Completion Index. Similarly, in the Canadian Focused Equity category 71.4% of active funds outperformed the blended benchmark of 50% S&P/TSX Composite + 25% S&P 500 + 25% S&P EPAC LargeMidCap Index.

The SPVIVA report, released quarterly, is designed to provide an objective comparison of funds’ performance versus their appropriate style indices. The fund performance is corrected for survivorship bias, and shows equal- and asset-weighted peer averages.

The midyear 2009 report showed that the majority of active mutual funds investing outside of Canada were able to outperform their benchmarks. Of active U.S. Equity funds, 62.3% outperformed the S&P 500, while 63% of International Equity funds outperformed the S&P EPAC LargeMidCap Index and 69.3% of Global Equity funds outperformed the S&P Developed LargeMidCap Index.

When measured over longer time periods, the majority of active funds underperformed their respective Standard & Poor’s benchmark over longer time periods. Only 16.7% and 7.6% of active Canadian Equity funds were able to outperform the S&P/TSX Composite Index over the three and five-year periods, respectively.

Over the one-year time period, active Canadian Equity funds fared better with 54.6% outpacing the S&P/TSX Composite Index.

For active funds in the U.S. Equity category, 27.1%, 19.6% and 10.6% of funds outpaced the S&P 500 over the one, three- and five-year periods respectively.

The results display a trend noticeable in past Standard & Poor’s scorecards.

“The results for Midyear 2009 continue to echo past results. Over shorter time periods we see active funds adding value but over longer time periods active fund outperformance is a rare observance,” said Jasmit Bhandal, director at Standard & Poor’s. “Investors face the hurdle of finding this extraordinary fund, and then have to hope that it will continue to repeat this performance.”

The scorecard noted that the survivorship rates over the past five-years was 43.8% for Canadian Equity, 39.8% for U.S. Equity, 58.1% for International Equity, and 41.3% for Global Equity. This indicates that a significant percentage of the funds in these four categories have been merged or liquidated over the past five years.

IE