SUMMARY
- S&P Dow Jones Indices has been the de facto scorekeeper of the ongoing active versus passive debate since the first publication of the SPIVA U.S. Scorecard in 2002. We have built on our 17 years of experience publishing the report by expanding scorecard coverage into Australia, Canada, Europe, India, Japan, Latin America, and South Africa.
- The SPIVA Australia Scorecard reports on the performance of Australian active funds against their respective benchmark indices over 1-, 3-, 5-, 10-, and 15-year periods.1 In this scorecard, we evaluated returns of over 829 Australian equity funds (large, mid, and small cap, as well as A-REIT), 420 international equity funds, and 115 Australian bond funds.
- In 2019, benchmark-relative performance of Australian funds was better than in 2018 for the majority of fund categories. In the Australian Equity General, Australian Equity Mid- and Small-Cap, and Australian Equity A-REIT categories, 61.5%, 46.9%, and 65.2% of funds were outperformed by their benchmarks, respectively.
- Australian Equity General Funds: In 2019, the S&P/ASX 200 recorded a total return of 4%, while Australian large-cap equity funds recorded a net return of 21.9% and 21.8% on equal- and asset-weighted bases, respectively. On an absolute and risk-adjusted basis, 61.5% and 67.9% of funds did not outperform the benchmark, respectively, and 1.8% of them were liquidated over the one-year period. Over the 5- and 10-year periods, 80.8% and 83.9% of funds underperformed the S&P/ASX 200 on an absolute basis, respectively.
- Australian Equity Mid- and Small-Cap Funds: The S&P/ASX Mid-Small gained 6% in 2019, while Australian mid- and small-cap funds recorded larger net returns of 25.6% and 23.3% on equal- and asset-weighted bases, respectively. On an absolute and risk-adjusted basis, 46.9% and 43.1% of funds lagged the benchmark, respectively, with 3.8% of them being liquidated. Over the 5- and 10-year periods, 69.7% and 49.1% of funds underperformed the S&P/ASX Mid-Small on an absolute basis, respectively.
- International Equity GeneralFunds: In 2019, more than 70% of international equity funds underperformed the S&P Developed Ex-Australia LargeMidCap on absolute and risk-adjusted International equity general funds posted an equal-weighted average gain of 24.6%, while the S&P Developed Ex-Australia LargeMidCap recorded a gain of 28.1%. Over the 5- and 10-year periods, 86.6% and 93.5% of funds in this category failed to beat the S&P Developed Ex-Australia LargeMidCap respectively.
- Australian Bond Funds: The S&P/ASX Australian Fixed Interest 0+ Index gained 2% in 2019, while the Australian bond funds gained 6.4% and 6.5% on an equal- and asset-weighted basis, respectively. On an absolute basis, 72.2% of Australian bond funds underperformed the benchmark, while 59.7% of funds underperformed on a risk-adjusted basis. Over 10-year period, 85.0% and 66.7% of funds in this category did not beat the benchmark on an absolute and risk- adjusted basis, respectively.
- Australian Equity A-REIT Funds: The S&P/ASX 200 A-REIT recorded a total return of 4% in 2019, while the Australian A-REIT funds gained a net return of 18.6% and 18.4% on equal- and asset-weighted bases, respectively. Of Australian A-REIT funds, 65.2% and 43.5% underperformed the benchmark on an absolute and risk-adjusted basis, respectively. Over the 10- year period, 82.0% and 71.9% of funds in this category underperformed the benchmark on an absolute and risk-adjusted basis, respectively.
- Fund Survivorship: As of year-end 2019, 3.5% and 3% of Australian funds from all measured categories were merged or liquidated over the one- and three-year periods, respectively. Over the longer periods, the survivorship rate dropped to 78.5% and 58.7% over the 5- and 10-year periods, respectively, with Australian A-REIT funds having the highest survival rates for both periods.
- Average Fund Returns: The Australian mid- and small-cap funds recorded lower asset-weighted returns than equal-weighted returns for all measured periods, indicating that smaller funds in this category tended to perform better than their larger This trend has been consistently observed in the SPIVA Australia Scorecards.
