Funds struggling to maintain outperformance


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.
Recommended for you
Fund managers may be operating in a squeezed environment, but a salary guide shows they are willing to pay up for specialist talent to diversify their fund range.
Reach Alternative Investments has entered into a strategic partnership with Russell Investments to bolster its wholesale private markets offering for financial advisers and investors.
Boutique investment consulting and research house Genium Investment Partners has announced a senior appointment to drive further growth in its research ratings business.
Nuveen has appointed a global head of estate, a successor to Chris McGibbon who steps down after almost 25 years.