“SPIVA is an important tool for investors,” said Jasmit Bhandal, director of business development at Standard & Poor’s Canadian Index Services. “Because SPIVA compares funds against the benchmark for that particular investment category this gives investors the appropriate threshold with which to compare returns.”
Longer-term results continue to be consistent with past results. Over the last three years, 10.5% of actively managed Canadian equity funds have outperformed the S&P/TSX Composite Index, 65% of actively managed Canadian small-cap funds have outperformed the S&P/TSX SmallCap Index, and 31.1% of U.S. equity funds have outperformed the S&P 500 Index. Five-year average fund returns show active funds underperforming the S&P/TSX Composite Index and S&P/TSX Capped Composite, both on an equal- and asset-weighted basis. Canadian SmallCap Equity funds fared better over this same timeframe, outperforming the S&P/TSX SmallCap Index.
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% to 67% 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 first-quarter SPIVA Canada scorecard, as well as previous quarterly SPIVA reports, is available on www.spiva.standardandpoors.com.
