“SPIVA keeps quarterly tabs on the active-versus-index debate in Canada,” said Steve Rive, Vice President, Canadian Index Services at Standard and Poor’s. “Because SPIVA compares the performance of actively managed Canadian mutual funds versus Standard & Poor’s indices in their respective categories, it allows us to measure “active risk,” something investors in Canadian mutual funds definitely need to be aware of.”
Longer-term results continue to be consistent with past results. Over the last three years, 6.4% of actively managed Canadian equity funds have outperformed the S&P/TSX Composite Index, 59% of actively managed Canadian small-cap funds have outperformed the S&P/TSX SmallCap Index, and 23.4% of U.S. equity funds have outperformed the S&P 500 Index. Five-year average fund returns show active funds outperforming the S&P/TSX Composite Index and underperforming the S&P/TSX Capped Composite, both on an equal- and asset-weighted basis.
Survivorship
A key attribute of the SPIVA methodology is its correction for survivorship bias, which can significantly skew results as funds liquidate or merge. Five-year survivorship ranges from 63.6% to 65.3% for the Canadian Equity, Canadian SmallCap, and U.S. Equity fund categories. This suggests that roughly one-third of funds in these three categories has merged or liquidated in the past five years.
The complete third-quarter SPIVA Canada scorecard, as well as previous quarterly SPIVA reports, is available on www.spiva.standardandpoors.com.
About SPIVA
The SPIVA methodology is designed to provide an accurate and objective apples-to-apples comparison of funds’ performance versus their appropriate style indices, correcting for factors that have skewed results in previous index-versus-active analyses in the industry. SPIVA scorecards show both asset-weighted and equal-weighted averages and include survivorship bias correction to account for funds that may have merged or been liquidated during the period under study. Fund categorizations are as defined by the Canadian Investment Funds Standards Committee (CIFSC), and fund data is drawn from Fundata’s mutual fund database.
About Standard & Poor's
Standard & Poor’s, a division of The McGraw-Hill Companies (NYSE:MHP), is the world’s foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With approximately 6,300 employees located in 20 countries and markets, Standard & Poor’s is an essential part of the world’s financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.
