Only one in two sterling-denominated funds have survived the last 10 years, according to latest figures from S&P.
Very few active managers have beaten the benchmark over the long term.
Older funds are charging almost 50% more than newer funds, AJ Bell research reveals
Matt Brennan, head of investment management at AJ Bell, comments: “First published in 2002, S&P have been producing what it calls the SPIVA (S&P Index Versus Active) scorecard for nearly two decades. It’s a quantitative review of how active managers have performed across various time periods against a relevant S&P benchmark. The headline statistics from the latest March 2022 report show that very few active managers outperform the benchmark when measured over long time periods, with more variable results over shorter time periods, or for more niche asset classes.
“Like any statistics produced in a report, these can be used by the user to confirm their view – for a rules-based investor it confirms their belief that markets are efficient, and it’s hard for an active manager to add value consistently. On the other hand, for those in the active management camp, it shows that although picking the winning managers may be hard, good managers do exist, especially in less certain areas such as UK small cap and emerging markets.
“However, beyond the active vs passive debate, one startling statistic jumps out. Of the funds in existence on 1 January 2012, only one in two of them are still going. This is staggering, given most funds tell investors they should invest in them for at least five years. Not all funds will have disappeared altogether, with several of them merging into other funds, however as an investor in an active fund, the question perhaps shouldn’t be ‘will this fund beat the benchmark’, but rather ‘will it still exist in the long term?”