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Standard & Poor's, the world's leading index provider, announced today the latest results for the Standard & Poor's Indices Versus Active Funds Scorecard (SPIVA) for Canada. The report has been significantly expanded to include the following additional fund categories: Canadian dividend and income equity, Canadian income trust equity, international equity, global equity, and Canadian-focused equity.
"The SPIVA Scorecard was originally designed to provide an accurate, objective, and reliable assessment of the performance of actively managed mutual funds versus their relative style benchmark," says Jasmit Bhandal, director at Standard & Poor's. "The inclusion of these additional categories will provide asset managers, advisors, and retail investors with a level of detail needed to make more informed investment decisions."
SPIVA reports the performance of actively managed Canadian mutual funds corrected for survivorship bias and shows equal- and asset-weighted peer averages. In 2007, actively managed Canadian equity funds, and Canadian dividend and income equity funds lagged indices. Only 24.3% of Canadian equity funds beat the S&P/TSX Composite Index. In contrast, 51.8% of small/mid-cap equity funds outperformed the S&P/TSX SmallCap Index, while 37.0% of Canadian dividend and income funds beat the S&P/TSX Canadian Dividend Aristocrats Index.
Over longer time periods, indices continue to outperform a majority of domestic active funds. Over the past three years, only 13.3% of actively managed Canadian equity funds outperformed the S&P/TSX Composite Index, while only 3.2% of active managers beat the S&P/TSX Canadian Dividend Aristocrats Index.
In the foreign equity categories for 2007, the majority of international, global equity, and U.S. equity funds underperformed relative to the S&P/Citigroup EPAC Index, S&P/Citigroup World Index, and the S&P 500 Index, respectively. Only 13.1%, 17.1%, and 14.9% of International equity, global equity, and U.S. equity funds outperformed over the past five years relative to their benchmarks. Three-year period results mirror this trend.
In the Canadian-focused equity category - which includes those funds with a predominantly Canadian allocation but also with foreign equity exposures - 51.6% of managers were able to outperform the index in this category over the one-year period, while in the three-year period only 40.5% were able to exceed the index return.
Survivorship
Survivorship over the five-year horizon is 61.9% for Canadian equity; 45.3%, U.S. equity; 60.7%, international equity; and 46.0%, global equity. In other words, a significant percentage of the funds in these four categories has been merged or liquidated over the past five years.
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- 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.
The complete 2007 SPIVA scorecard for Canada is available on
www.spiva.standardandpoors.com.
About Standard & Poor's
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is
the world's foremost provider of financial market intelligence, including
independent credit ratings, indices, risk evaluation, investment research, and
data. With approximately 8,500 employees, including wholly owned affiliates,
located in 23 countries, 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.
