Since the first publication of the S&P Indices Versus Active Funds (SPIVA) U.S. Scorecard in 2002, S&P Dow Jones Indices has been the de facto scorekeeper of the ongoing active versus passive debate.
The SPIVA Canada Scorecard measures the performance of Canadian actively managed funds against their respective benchmarks over various time horizons, covering large-, mid- and small-cap segments, as well as international and global equity funds.
Mid-Year 2023 Highlights
The first half of 2023 was relatively challenging for most actively managed funds in Canada. More than two-thirds of active funds underperformed their benchmarks in several categories, including Canadian Equity funds at 71%, Canadian Focused Equity funds at 78%, U.S. Equity funds at 76% and Global Equity funds at 84% (see Exhibit 1 and Report 1). International Equity funds posted the lowest mid-year underperformance, with 66% lagging the benchmark. Underperformance rates generally increased with time horizons.
- Canadian Equity Funds: The S&P/TSX Composite Index gained 5.7% in H1 2023, while Canadian Equity funds gained 5.1% and 5.4% on equal- and asset-weighted bases, respectively. Underperformance rates hit 71% over six months, climbing to 65%, 95% and 95% over the 3-, 5- and 10-year horizons, respectively.
- Canadian Focused Equity Funds: The blended benchmark of 50% S&P/TSX Composite Index + 25% S&P 500® + 25% S&P EPAC LargeMidCap gained 8.8% in H1 2023, outperforming 78% of Canadian Focused Equity funds. Underperformance rates were 57%, 89% and 98% over the 3-, 5- and 10-year horizons, respectively.
- Canadian Dividend & Income Equity Funds: The S&P/TSX Canadian Dividend Aristocrats® Index gained 4.2% during H1 2023, while Canadian Dividend & Income Equity funds gained 3.5% and 2.9% on equal- and asset-weighted bases, respectively. Underperformance rates reached 69% over the six-month period, rising to 90%, 92% and 73% over the 3-, 5- and 10-year horizons, respectively.
- Canadian Small-/Mid-Cap Equity Funds: The S&P/TSX Completion Index rose 5.6% in H1 2023, and 84% of Canadian Small-/Mid-Cap Equity funds underperformed the index. Funds in this category gained 3.1% and 3.5% on equal- and asset-weighted bases, respectively, over the six-month period.
- U.S. Equity Funds: The S&P 500 gained 14.2% in H1 2023, and 76% of U.S. Equity funds underperformed the index. Few funds in the U.S. Equity category outperformed over the long term, with 96%, 96% and 95% underperforming over 3-, 5- and 10-year horizons, respectively.
- International Equity Funds: 66% of International Equity funds trailed the S&P EPAC LargeMidCap in H1 2023, and 84% and 94% underperformed over the 5- and 10-year periods, respectively.
- Global Equity Funds: The S&P Developed LargeMidCap rose 12.9% in H1 2023 and Global Equity funds gained 9.1% and 7.5% on equal- and asset-weighted bases, respectively. Over the six-month period, 84% of funds in the category trailed the benchmark. Over the 3-, 5- and 10-year periods, 95%, 96% and 97% of funds underperformed, respectively.
- Fund Survivorship: Liquidation rates for all categories were in single digits for the six-month period ending June 30, 2023. Over the 10-year period, 47% of Canadian Equity funds merged or liquidated, and 39% of funds disappeared across all categories (see Report 2).
