The 2018/19 financial year was a particularly difficult one for active Australian equity managers, with fewer than 10 per cent of them able to beat the market index.
Fund managers had to contend with the big December quarter sell-off, only to see the market rebound strongly in the June half.
Over the longer term, about 20 per cent of active Australian equity managers beat the index each year. But last year’s December quarter sell-off followed by the strong recovery in the June half proved difficult for managers to navigate.
The latest S&P Dow Jones Indices SPIVA Australia Scorecard shows that the majority of managers lagged their indexes in all asset classes reviewed.
Large-cap Australian equities. The S&P/ASX 200 index rose 11.6 per cent in the year to June but active Australian large-cap equity funds managed an average return of only 6.3 per cent.
Only 6.8 per cent of managers beat the index over the year.
Over the past three years, 16.7 per cent of active Australian equity managers beat the index.
In the second half of the financial year the S&P/ASX 200 rose 19.7 per cent, while active Australian equity managers produced an average return of 17.3 per cent (on an equal-weighted basis).
Mid-small cap Australian equities. Almost 40 per cent (39.5 per cent) of active mid and small cap managers beat the S&P/ASX Mid-Small Index in the year to June.
The index rose 2.9 per cent in the year to June, while the average active manager return was 1.8 per cent.
Over the past three years, 20.2 per cent of active managers beat the index.
International equity funds. Twenty-seven per cent of international equity managers beat the index in 2018/19.
The S&P Developed Ex-Australia MargeMidCap Index rose 12.1 per cent in the year to June, while active funds in the sector rose by an average of 9.2 per cent.
Over the past three years, 26 per cent of active international equity managers beat the index.
Australian bonds. Only 15.4 per cent of active Australian bond fund managers beat the index last year.
The S&P/ASX Australian Fixed Interest 0+ Index rose 9.5 per cent in the year to June, while the average bond fund return was 7.9 per cent.
Over the past three years, 22.4 per cent of active Australian bond fund managers beat the index.