S&P Indices Have Strong Year in 2004 over Active Equity Funds

January 18, 2005 (PLANSPONSOR.com) - Standard & Poor's benchmarking indices outperformed their actively managed equity counterparts in the mutual fund business in eight out of nine style categories in 2004, according to the company.

According to the Standard & Poor’s Indices Versus Active Funds Scorecard (SPIVA), equal and asset-weighted average returns for actively managed equity funds were lower in eight out of nine categories, large-cap growth being the only exception. This is up from last year, when active funds outdid S&P benchmarks in five of nine categories.

Looking at four broad-market benchmarks for 2004 and the last three years, it is found that:

  • the S&P Composite 1500 beat 51.4% of actively managed domestic equity funds in 2004 and 59.9% over the past three years.
  • the S&P 500 outperformed 61.6% of actively managed large-cap funds in 2004 and 68.9% over the past three years.
  • the S&P MidCap 400 outperformed 61.8% of actively managed mid-cap funds in 2004 and 79.1% over the past three years.
  • the S&P SmallCap 600 outperformed 85% of actively managed small-cap funds in 2004 and 76.8% over the past three years.

SPIVA, which adjusts for market survivorship, also indicated that mergers and liquidations of funds slowed in 2004, with the percent of general equity funds merging or liquidating on the year pinned at 5.2%, down from last year’s 7.4%. SPIVA also indicated that funds were more style consistent in 2004, with style consistency for actively managed domestic equity funds at 88.8%, up from last year’s figure of 72.2%.

The complete SPIVA Scorecard is available at www.spiva.standardandpoors.com .