Key Takeaways
- • 79% of active mutual fund managers underperformed the S&P 500 in the most recent SPIVA scorecard year, according to S&P Dow Jones Indices data reported by CNBC.
- • The underperformance rate represents an 86% jump over the past 10 years, per the report cited by CNBC.
- • The latest report marks 12 consecutive years in which the average actively managed large-cap fund trailed the S&P 500, according to CFRA's Todd Rosenbluth.
- • Rosenbluth attributed the persistent gap to higher costs for active managers relative to the S&P 500, which he noted is effectively free to access through an ETF wrapper.
Summary
A new S&P Indices versus Active (SPIVA) scorecard shows that 79% of active mutual fund managers underperformed the S&P 500 last year, according to CNBC. The report, which measures actively managed funds against their respective category benchmarks, reflects an 86% increase in the share of underperforming managers over the past decade, the publication reported.
S&P Global CEO Doug Peterson told CNBC's "ETF Edge" that the quarterly report is built on non-public information. Peterson said that access to the underlying data is restricted to a small group bound by strict rules on standards of performance and behavior. He added that the S&P Dow Jones Indices committee can assess the economy as a whole or examine specific segments against which an index is intended to perform.
S&P has published the SPIVA report annually since 2002, initially focusing on the U.S. market before expanding to markets across the globe. The latest edition extends a streak of 12 consecutive years in which the average actively managed large-cap fund has underperformed the S&P 500, according to Todd Rosenbluth, CFRA senior director of ETF and mutual fund research.
Rosenbluth argued that cost is a structural headwind for active managers. He said that active funds face higher expenses when competing with the S&P 500, which he described as essentially free to access through an ETF wrapper. Additional SPIVA data cited in publisher context indicates that over a 10-year horizon, 87.4% of active managers underperformed, and 82.2% of small-cap managers underperformed at the same mark.
S&P Global CEO Doug Peterson told CNBC's "ETF Edge" that the quarterly report is built on non-public information. Peterson said that access to the underlying data is restricted to a small group bound by strict rules on standards of performance and behavior. He added that the S&P Dow Jones Indices committee can assess the economy as a whole or examine specific segments against which an index is intended to perform.
S&P has published the SPIVA report annually since 2002, initially focusing on the U.S. market before expanding to markets across the globe. The latest edition extends a streak of 12 consecutive years in which the average actively managed large-cap fund has underperformed the S&P 500, according to Todd Rosenbluth, CFRA senior director of ETF and mutual fund research.
Rosenbluth argued that cost is a structural headwind for active managers. He said that active funds face higher expenses when competing with the S&P 500, which he described as essentially free to access through an ETF wrapper. Additional SPIVA data cited in publisher context indicates that over a 10-year horizon, 87.4% of active managers underperformed, and 82.2% of small-cap managers underperformed at the same mark.
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