SUMMARY
The S&P Indices Versus Active (SPIVA) Latin America Scorecard reports on the performance of actively managed mutual funds in Brazil, Chile, and Mexico against their respective benchmarks over one-, three-, and five-year investment horizons.
Brazil
- A reversal from the strong returns observed in 2017, the Brazilian equity market declined in the first half of 2018, as the S&P Brazil BMI returned -4.61%. Large cap companies (-5.32%, as measured by the S&P Brazil LargeCap) performed relatively worse than mid- and small-cap companies (-3.19%, as measured by the S&P Brazil MidSmallCap).
- With the continued moderation of inflation in Brazil in late 2017 and early 2018, corporate and government bonds grew at a slower pace than in previous years. Corporate bonds (as measured by the Anbima Debentures Index) were up 8.51% and government bonds (as measured by the Anbima Market Index) were up 8.47% over the oneyear period.
- Four of the five categories saw the majority of managers underperforming for the one-year period ending in June. The one exception was the large-cap equities group, where a slight majority of managers outperformed the S&P Brazil LargeCap. For this category, the asset-weighted average fund return (14.94%) was higher than the equal-weighted average fund return (14.34%); this leads to the notion that larger fund managers (by net assets) performed relatively better than smaller fund managers.
- Across all categories, the majority of fund managers underperformed their respective category benchmarks for the three- and five-year horizons.
Chile
- Following the trend of other Latin American markets in 2018, the Chilean equity market fell in the first half of the year, by -4.39%.
- For the one-year period, 71% of active fund managers in Chile underperformed the S&P Chile BMI. Even fewer managers were successful in outperforming over longer periods; 14% outperformed over the last three years and 9% outperformed over the last five years.
Mexico
- The S&P/BMV IRT declined 2.25% in the first half of 2018, with a similar return (-2.48%) for the one-year period.
- Approximately 44% of equity fund managers were able to beat the benchmark (S&P/BMV IRT) in the last year. As we’ve seen in prior SPIVA scorecards, the success rate declined for longer time periods—18% of managers outperformed for the three-year period, while 17% outperformed for the five-year period.
- For the five-year period, the median (second quartile) fund had an annualized return of 3.48%, lagging the S&P/BMV IRT by 1.74% on an annualized basis.
