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SPIVA U.S. Mid-Year 2017 How do active managers stack up against their benchmarks over short and long time periods?
BY Aye Soe

SUMMARY

• Global markets soared in the first half of 2017, largely due to the momentum gained from the November 2016 U.S. election results. The U.S. equity market posted strong gains across all cap ranges, with the S&P SmallCap 600® posting 22.47% over the 12-month period as of June 30, 2017. The S&P MidCap 400® and S&P 500® followed, reporting gains of 18.57% and 17.90%, respectively.


• During the one-year period, the percentage of managers outperforming their respective benchmarks noticeably increased, compared to results from six months prior. Over the one-year period, 56.56% of large-cap managers, 60.69% of mid-cap managers, and 59.55% of small-cap managers underperformed the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, respectively.


•  We also see similar results between managers’ weighted fund returns and the benchmarks over the same period. The observation is consistent across all three market cap ranges. This is in contrast to six months prior when over 80% of funds underperformed and displayed large performance deviations from their cap-weighted benchmarks.


• While results over the short term were positive, the figures are more in line with historical results when viewed over longer-term investment horizons. Over the five-year period, 82.38% of large-cap managers, 87.21% of mid-cap managers, and 93.83% of small-cap managers lagged their respective benchmarks.


•  Similarly, over the 15-year investment horizon, 93.18% of large-cap managers, 94.40% of mid-cap managers, and 94.43% of small-cap managers failed to outperform on a relative basis.


•  Over the 12-month period ending June 30, 2017, growth managers across all three market cap ranges fared better than their core and value counterparts. The results highlight the cyclicality of style managers, as core managers fared the best six months prior with the exception of small caps, while value managers outperformed both core and growth one year prior.

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