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SPIVA U.S. Year-End 2018 How do active managers stack up against their benchmarks over short and long time periods?
BY Aye Soe


2018 was a rollercoaster ride for financial markets: after trade tensions weighed on investors’ sentiment in Q1, strong corporate earnings and a rosy U.S. economic outlook initially drove a recovery, before uncertainty over global economic growth and future Fed policy wiped off YTD gains for many equity benchmarks in Q4.

The S&P 500® (-4.38%) finished 2018 with its first calendar-year loss in a decade, while the S&P MidCap 400® (-11.08%) and the S&P SmallCap 600® (-8.48%) also fell.

Amid the market volatility, 2018 was the fourth-worst year for U.S. equity managers since 2001; 68.83% of domestic equity funds lagged the S&P Composite 1500® during the one-year period ending Dec. 31, 2018.

For the ninth consecutive year, the majority (64.49%) of large-cap funds underperformed the S&P 500. The figures highlight that heightened market volatility does not necessarily result in better relative performance for active investing.

Similarly, small-cap equity managers found it more challenging to navigate 2018’s market environment compared with 2017’s rangebound market movements; 68.45% of all small-cap funds lagged the S&P SmallCap 600 over the one-year horizon. Underperformance was particularly noticeable in the small-cap value (83.33%) and small-cap core (87.55%) categories.

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