Despite the extreme market volatility in the first half of 2020, the vast majority of active Canadian equity managers continued to fall short of their benchmarks, according to a new report from S&P Dow Jones Indices (S&P DJI).

The firm reported that 88% of Canadian equity funds underperformed their benchmarks in the year ended June 30.

This was essentially in line with historical trends, even as the wild market swings in the first six months of 2020 due to the effects of Covid-19 offered “the types of market conditions that provide active managers opportunity to shine,” S&P DJI said.

The S&P/TSX Composite index hit an all-time high on Feb. 20 before dropping 37.2% after the pandemic emerged. Markets then recovered from those lows to sit 7.5% lower for the first half of 2020.

“Canadian equity funds were particularly notable for their level of underperformance,” S&P DJI said.

“On an asset-weighted basis, Canadian equity funds returned a dismal 7.9% below the S&P/TSX Composite over the past year, the worst relative performance of any fund category,” it noted.

While most managers lagged, S&P DJI reported that the Canadian dividend and income equity category was a relative bright spot, with 69% of funds outperforming over the past year.

This outperformance came as the dividend indexes lagged the overall market, it said: while the S&P/TSX Composite index fell 2.2% in the 12 months to June 30, the S&P/TSX Canadian Dividend Aristocrats index dropped 10.8%, “the worst performance of any fund category benchmark.”

A majority of Canadian small-/mid-cap equity managers also lagged their benchmarks, as did Canadian-focused equity funds, it said.

“Internationally focused funds provided some respite from poorer domestic returns, although active management still broadly failed to add value,” S&P DJI said.

For instance, it reported that 82% of global equity managers underperformed over the past year.

And, while U.S. equities offered the best returns over the past decade, 95% of active managers underperformed in that period, the report said.

“Larger funds in Canada tended to outperform their smaller counterparts, as 23 of the 28 results showed higher asset-weighted returns across the seven fund categories and four time horizons studied,” the report also noted.