Active funds in Europe focused on Dutch equities have the worst record for underperforming their benchmarks, with 100% of them seeing losses against their reference indices over a five-year period.
Data from Standard & Poor’s (S&P) shows that as well as the total failure of active funds to beat Netherlands S&P benchmarks over five years, 97% of active equity funds focusing on Dutch equities failed to beat their benchmarks over ten years, and 93% failed over three years.
The data comes from S&P’s year-end ‘Spiva’ scorecard, which is widely used in the industry as a tally of active versus passive performance, and measures funds that use S&P benchmarks.
S&P said it had for the first time researched the performance versus benchmark for active funds across a wider range of European markets, looking at how funds in Europe fared when investing in the stock markets of the UK, France, Germany, Switzerland, Italy, Spain, Netherlands, Denmark, Sweden and Poland (see graphic).
Among the findings out today are:
- Underperformance by active funds increased sharply over three years, ranging from 34% for those investing in the UK to 93% for those investing in the Netherlands;
- Over five years, underperformance continued to increase, ranging from 52% for those investing in Italy, to 100% for those investing in the Netherlands;
- By ten years, more than two-thirds of active funds had underperformed their benchmarks, ranging from 72% (UK) to 97% (Netherlands).
Underperformance was substantially higher in actively managed global, emerging market and US Equity funds, compared to European equity funds. For example, just over 70% of active global equity funds underperformed the S&P Global 1200 in 2015, “despite active management opportunities in volatile markets”, S&P said.
Last year, Fianstilsynet, the Norwegian financial regulator, took action against DNB Asset Management over a fund that charged an active fee but performed very closely to its benchmark.
©2016 funds europe