Indexing Wins the Day in First Half 2004

The S&P Indices Versus Active Funds (SPIVA) Scorecard, as of June 30, reflecting year-to-date returns, found that:

• the S&P 500 beat 63.1% of large-cap funds
• the S&P MidCap 400 outpaced 57.3% of mid-cap funds
• the S&P SmallCap 600 came out ahead of 90% of small cap funds.

The latest report shows longer-term results being in line with past observations. For the five-year period through June 30, 2004, the S&P 500 has outpaced 53.4% of large-cap funds, the S&P MidCap 400 outperformed 85.1% of mid-cap funds, and the S&P SmallCap 600 edged out 76% of small-cap funds.

Meanwhile, the 36-month results are likewise in line, with 65.5% of large-cap funds, 78.3% of mid-cap funds, and 76% of small-cap funds faring worse than their index benchmark.  

Generally, the SPIVA Scorecard showed that funds with bigger assetshave bested their smaller fund counterparts this year, with smaller funds stronger performers than their larger counterparts in only one style box. “Funds with smaller asset sizes can be more nimble in reacting to market trends,” Rosanne Pane, Mutual Fund Strategist at Standard & Poor’s said in a news release. “This ability did not help smaller funds in 2004’s trend-less market.”  

The SPIVA report also monitors index fund performance and costs. The asset-weighted average fees for S&P 500, S&P MidCap 400 and S&P SmallCap 600 funds are 0.15%, 0.32%, and 0.30% respectively.

“The current market has been in a trading range with the S&P Composite 1500 returning 1.33% in the second quarter and 3.4% in the first six months,” Pane said. “In 2003, active funds that were over-weight in economically sensitive industries participated in the robust market rebound in the second quarter when the S&P Composite 1500 returned 15.2%.”

More information is atwww.spiva.standardandpoors.com .