Benchmark indices outperformed actively managed mutual funds in the U.S. in all but one style category in 2004, according to Standard & Poor’s.

S&P’s Indices Versus Active Funds Scorecard (SPIVA) found that equal and asset-weighted average returns for active funds lagged benchmarks in eight out of nine investment styles in 2004, the exception being large-cap growth. The 2004 results are in contrast to 2003, where a majority of active funds outperformed indices in five out of nine styles, indices outperformed active funds in three styles, and where one category was a tie.

Year-to-date, through December 2004, the S&P Composite 1500 outperformed 51.4% of actively managed domestic equity funds, the S&P 500 outperformed 61.6% of actively managed large-cap funds, the S&P MidCap 400 outperformed 61.8% of actively managed mid-cap funds, and the S&P SmallCap 600 outperformed 85.0% of actively managed small-cap funds.

“In the fourth quarter of 2004, the S&P 500 Index returned 9.23%, representing 85% of the total return for the year (+10.87%),” said Rosanne Pane, mutual fund strategist at Standard & Poor’s, in a release. “The impressive rally after the election favored the growth style, and helped large-cap growth funds outperform their index for the year.”

Standard & Poor’s also determined that longer-term results are consistent with past results. Over the past three years, the S&P Composite 1500 has outperformed 59.9% of all domestic equity funds, the S&P 500 has outperformed 68.9% of large-cap funds, the S&P MidCap 400 has outperformed 79.1% of mid-cap funds, and the S&P SmallCap 600 has outperformed 76.8% of small-cap funds. Similarly, over the past five years, indices have outperformed 56.4% of all domestic equity funds, 58.7% of large-cap funds, 84.2% of mid-cap funds, and 72.4% of small-cap funds.

The research firm also reports that fund mergers and liquidations slowed down in 2004. The proportion of general equity funds merging or liquidating in 2004 was 5.2%, compared to 7.4% in 2003.

Funds were more style consistent in 2004 across all categories, it adds. Style consistency of actively managed domestic equity funds was 88.8% in 2004 compared to 72.2% in 2003.

“Mergers and liquidations of funds slowed down in 2004,” said Srikant Dash, Index Strategist at Standard & Poor’s. “The percent of actively managed equity funds merging or liquidating in 2004 was 5.2%, compared to 7.4% in 2003. In addition, mutual funds were also more style consistent, with 88.8% of funds staying in their investment style in 2004 compared to 72.2% in 2003.”