Fewer active European equity funds underperforming benchmark

Active_vs_PassiveThe number of active European equity funds outperforming their benchmarks has risen in the past year.

Research by S&P Dow Jones Indices (SPDJI) for its ‘Spiva Europe Scorecard’ found that the number of underperforming euro-denominated European equity funds fell to 50.9% this year, from 80.4% in 2016.

However, when asset-weighted performance was considered, active funds investing in pan-European equities collectively failed to beat the benchmark.

The S&P Europe 350 returned 18.6% over the one-year period, which compared to active managers’ asset-weighted performance of 17.6%.

Also, over the past ten years, the majority of active fund categories in Europe have underperformed. 

Star-performers in the UK were active funds investing in small-cap stocks, generating average, asset-weighted returns of 38.3% compared to a 22% returned by the S&P UK SmallCap Index.

Active funds investing in UK equity achieved an average asset-weighted return of 24.2% over the most recent year, compared to just 17.6% for the corresponding benchmark, S&P United Kingdom BMI.

In this period 80% of sterling denominated UK actively managed funds outperformed the S&P United Kingdom BMI though the figure fell to 28% over a ten-year period.

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