Spiva: Passive outperforms active funds across Europe

The results of the Year-End 2015 Europe S&P Indices Versus Active Funds (Spiva) Scorecard are published today and for the first time include a breakdown of performance of actively managed funds in a wider number of specific European countries, against their relevant S&P benchmarks and ten-year data ending 31 Dec 2015.

Since its first publication 14 years ago, the Spiva Scorecard has served as the de facto scorekeeper of the active versus passive debate.

Highlights from the report:
– Compared to the S&P Europe 350, underperformance of actively managed European Equity funds increases sharply after just one year, rising from 31.9% in year one, to 63.8% by end year three, 80.6% in year five, to 86.3% after ten years, as shown by the diagram below:

Spiva 1

– For the first time, S&P has researched the performance vs benchmark for active funds across a wider range of European markets – UK, France, Germany, Switzerland, Italy, Spain, Netherlands, Denmark, Sweden and Poland. These findings show:
o Underperformance over one year of active equity funds compared to their respective index ranged from 19.6% (Poland) to 69.7% (Denmark)
o Underperformance increased sharply over three years, ranging from 33.8% (UK) to 93.3% (Netherlands)
o Over five years, underperformance continued to increase, ranging from 51.6% (Italy) to 100% (Netherlands)
o By ten years, more than two-thirds of active funds had underperformed their benchmarks, ranging from 71.8% (UK) to 96.8% (Netherlands)
o These findings are summarised in the graph below:

Spiva 2

– In 2015, underperformance was substantially higher in actively managed Global, Emerging Market and US Equity funds, compared to European Equity funds
• 73.6% of active Global Equity funds underperformed the S&P Global 1200 in 2015, despite active management opportunities in volatile markets. Over ten years, 97.8% of actively managed Global equity funds underperformed.
• 74.9% of Emerging Market active funds underperformed the S&P/IFCI last year, rising to 97.0% over ten years
• 83.9% of actively managed US equity funds underperformed the S&P 500 in 2015, with 98.9% underperforming over ten years

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