Over the years, SPIVA has produced key findings that shed light on the performance and consistency of actively managed funds. Here are some of the notable findings:
1. Consistent Underperformance: SPIVA has consistently found that a majority of actively managed funds underperform their benchmarks over various time periods. This suggests that the average active fund manager has struggled to generate returns that outpace the broader market.
2. Long-Term Underperformance: The SPIVA reports have shown that actively managed funds tend to underperform over longer time horizons, such as three, five, and ten years. This indicates that the challenges faced by active managers in outperforming the market persist over extended periods.
3. Persistence of Outperformance: SPIVA has revealed that few actively managed funds consistently outperform their benchmarks. The data suggests that past success is not a reliable indicator of future performance, as a significant portion of funds that outperformed in one period fail to do so consistently over time.
4. Impact of Fees: SPIVA’s research highlights the impact of fees on the performance of actively managed funds. On average, actively managed funds tend to have higher expense ratios compared to passive index funds. The higher costs can erode the net returns, making it more challenging for active managers to outperform their benchmarks consistently.
5. Asset Class Analysis: SPIVA’s reports delve into various asset classes, including domestic and international equities, fixed income, and real estate investment trusts (REITs). The findings reveal similar patterns of active underperformance across these asset classes.
Overall, SPIVA’s research has consistently shown that the majority of actively managed funds have struggled to outperform their benchmarks over time. These findings have reinforced the argument in favor of passive investing, where investors seek to replicate the performance of a market index rather than trying to beat it through active management.