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
- The Brazilian equity market saw robust returns in 2017, with the S&P Brazil BMI returning over 28% for the year. Smaller companies performed relatively better than their larger counterparts; the S&P Brazil MidSmallCap increased nearly 37%, while the S&P Brazil LargeCap rose approximately 25%.
- The Brazilian fixed income market showed stable returns in 2017, as corporate bonds (as measured by the Anbima Debentures Index) were up 11.7% and government bonds (as measured by the Anbima Market Index) were up 12.8%.
- The outperformance results show that the majority of fund managers underperformed their respective category benchmarks in the longer-term periods of three and five years. Over the short-term horizon, broad equities and both fixed income categories saw the majority of managers underperform. For the size segment equity categories (Brazil Large-Cap Funds and Brazil Mid-/Small-Cap Funds), managers fared relatively better; 53% of managers within those categories outperformed their respective benchmarks for the one-year period.
Chile
- Chilean equities ended 2017 strong, with an increase of over 33% for the year. This marks the highest calendar year return for the country since 2010.
- Active equity managers in Chile continued to underperform over short- and long-term periods. Nearly 76% of managers underperformed the S&P Chile BMI in 2017, while 93% underperformed the benchmark over the five-year period.
Mexico
- The S&P/BMV IRT, the total return version of the S&P/BMV IPC, is being introduced as the category benchmark for Mexico equity funds starting with this year-end 2017 report. The S&P/BMV IPC is widely used by local Mexican asset managers as the de facto benchmark, hence the call to change in order to ensure that the SPIVA report is as relevant as possible for the industry. For this year-end 2017 report, active funds were compared against both benchmarks and were reported separately in the relevant reports. For future reports, the S&P Mexico BMI will no longer be included.
- While the market was slightly negative (-0.24%) for the last six months of the year, it was still up by double digits for 2017, as the S&P/BMV IRT returned 10.49%.
- Compared to the mid-year 2017 report, a smaller percentage of active fund managers were able to outperform the benchmark for year-end 2017. Just 8% of managers outperformed the S&P/BMV IRT in 2017—the same result occurred when comparing the managers to the S&P Mexico BMI. Over the five-year period, 74% of managers underperformed the S&P/BMV IRT.
- High survivorship of Mexico equity funds continued, as all active funds survived over the one-year period and 91% survived over the five-year period.
