Funds struggling to maintain outperformance

24 June 2020
| By Laura Dew |
image
image
expand image

Only 14% of ‘top-quartile’ Australian active funds have managed to consistently retain this rating over three years, according to S&P Dow Jones.

Latest data from the index provider to December 2019 found 14% of top quartile funds retained that rating over three years and only 1% retained it over five years.

Funds in the Australian real estate investment trust (AREIT) equity sector were least likely to remain in the top quartile over three years while Australian fixed income funds were most likely.

Across all fund sectors, only 15.8% of funds consistently beat their benchmarks over three years and 1.3% over five years. The most-consistent sector over three years was the Australian equity mid and small cap sector. For Australian equity funds, only 16 of the 145 funds which outperformed in 2017 continued to outperform in the subsequent two years.

Looking at outperformance over five years, of the 397 Australian funds which beat their benchmark in 2015, only five (1.3%) managed to repeat this outperformance over four consecutive years and there were no specific sectors which performed better than others.

S&P Dow Jones said funds that did outperform in the five-year period tended to have a lower liquidation rate in the subsequent five years across all categories.

Out of the 167 Australian funds which were top-quartile in the five-year period ending December 2014, only 15% of them were liquidated during the subsequent five years.

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

2 weeks 6 days ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 5 days ago

TOP PERFORMING FUNDS