According to an S&P news release, the S&P SmallCap 600 led 63.6% of small-cap funds in 2006, however 53.3% of actively managed mid-cap funds beat the S&P MidCap 400.
Rosanne Pane, Mutual Fund Strategist at Standard & Poor’s, said in the release the performance of the S&P 500 was over 3% better than that of large-cap funds, while the S&P SmallCap 600 outperformed small-cap funds by almost 2%. She also said active managers of mid-cap funds outperformed the S&P MidCap 400 by 34 basis points.
For international equities, in 2006, indexes continued to lead actively managed international funds. The S&P/Citigroup PMI World Index outperformed 58% of actively managed global funds. Over the same time period, the S&P/Citigroup PMI World ex U.S. outpaced 50.5% of international funds, and the S&P/Citigroup EMI World ex U.S. led 63.3% of international small company funds.
In addition, the S&P/IFCI Composite has outperformed 75% of actively managed emerging markets funds.
Also in 2006, seven of eight domestic taxable fixed income indexes (Lehman Brothers Bond Indices, Merrill Lynch All U.S. Convertibles Index) outpaced active funds, with short-term general funds being the only exception. Two of the three active global fixed income styles outperformed the Lehman Brothers Global Bond Indices in 2006.
SPIVA data also showed a decline in average fund expenses for asset-weighted index funds (S&P 500, S&P MidCap 400 and S&P SmallCap 600) in 2006 versus that of 2005. Expense ratios for both equal-weighted index funds and actively managed funds declined in two of the three capitalization categories and increased for equal weighted small-cap index funds and mid-cap active funds.
According to the SPIVA, over the past three years (and five years), the S&P 500 has beaten 66.7% (71.4%) of large-cap funds, the S&P MidCap 400 has outperformed 65.1% (79.7%) of mid-cap funds, and the S&P SmallCap 600 has outpaced 80.6% (77.5%) of small-cap funds.
Srikant Dash, Index Strategist at Standard & Poor’s, added in the press release that, while indexes outperformed active fund managers in six out of nine domestic style boxes in 2006, over the last five years, more than 70% of actively managed large-, mid- and small-cap funds have failed to beat their comparable S&P benchmark.
The complete fourth quarter 2006 SPIVA scorecard and previous quarterly SPIVA reports are available at www.spiva.standardandpoors.com .