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. Over the years, we have built on our 16 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 actively managed Australian mutual funds against their respective benchmark indices over 1-, 3-, 5-, 10-, and 15-year investment horizons. 1 In this scorecard, we evaluated returns of more than 849 Australian equity funds (large, mid, and small cap, as well as A-REIT), 425 international equity funds, and 116 Australian bond funds.
In the one-year period ending June 30, 2018, the majority of Australian funds in most categories underperformed their respective benchmarks, apart from the Australian mid- and small-cap category. However, the yearly active versus index figures varied across market cycles without consistent trends.
We have consistently observed that the majority of Australian active funds in most categories fail to beat their comparable benchmark indices over the long term. Over the 10-year period ending June 30, 2018, almost 90% of international equity funds and more than 70% of Australian equity general, Australian bond, and A-REIT funds underperformed their respective benchmarks on an absolute basis. In contrast, more than half of Australian small-cap funds beat their benchmarks.
Observations based on risk-adjusted returns were similar for most categories, with the result for the Australian bond and A-REIT funds being more favorable across various measured periods.
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