Large-cap Australian share funds the least active in the world - Morningstar
Large-cap Australian share funds are among the least active in the world when compared to other single-country and international share funds.
That’s according to Morningstar’s latest report which involved an analysis of 75 large-cap Australian share strategies and the degree to which ‘activeness’ in share funds has changed over the last three years.
The active share scores ranged from 25 per cent (highly index-aware) to over 80 per cent (highly active), with the optimal position for active share in risk/reward terms between the 40 and 60 per cent bracket, the paper stated.
“The average active share score has been on the upturn since the Australian share market’s bottom in March 2009, the most index-aware fund managers appearing to have become willing to take more active positions,” Morningstar stated.
A high active share score indicates greater potential for divergence from the benchmark but does not necessarily guarantee superior returns compared to Australian share funds with lower active scores. This is despite active share funds “in most cases” charging more in fees than compared to less active funds, the report found.
According to Morningstar, the “tightly-constrained and top heavy” nature of the S&P/ASX200 Accumulation Index at least partly accounts for the fact that on average most large-cap Australian share fund managers are making active decisions with only half of their portfolios.
In Morningstar’s list of Australia’s most active share funds, Lazard Select Australian Equity ranked first with an average active share score of 79.10. This was followed closely by SDH20 (78.9) and Perennial Growth High Conviction (76.7).
The least active Australian share fund was found to be Macquarie Australian Equities with a score of 25.20, followed by Advance Australian Shares Multi-Blend (30.2) and Blackrock Scientific Australian Equity (30.6), according to Morningstar.
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