The debate about whether to select an active fund manager, or a passive manager through an index tracking exchange-traded fund, has been stirred up again. This follows the publication of new research by index provider S&P Dow Jones into the performances of managed funds in Australia.
Known as the SPIVA® Australian Scorecard, S&P has looked at 608 Australian equity funds, 294 international equity funds and 66 Australian bond funds, and compared their performances (after fees) over 1 year, 3 years and 5 years ending 30 June 2016 to the performances of the most relevant benchmark.
The results are pretty alarming. Most active funds underperformed compared to their benchmark index.