With markets booming, Canadian equity managers delivered mixed results over the past year, according to the S&P Indices Versus Active (SPIVA) Canada mid-year scorecard published on Tuesday.
The SPIVA scorecard measures the performance of actively managed funds against their S&P Dow Jones Indices benchmark indexes.
The mid-year report comes after a year of impressive market gains. In Canada, the S&P/TSX Composite index gained about 34% for the 12-month period ending on June 30, the report noted. The smaller-cap names of the S&P/TSX Completion index gained about 35%.
Over that same period, 60% of Canadian equity funds underperformed the Composite index, while only 15% of Canadian small- and mid-cap funds underperformed the Completion index.
Other mixed results: almost all Canadian dividend and income equity funds (98%) fell short of the S&P/TSX Canadian Dividend Aristocrats index; in contrast, only 23% of Canadian-focused equity funds underperformed the associated benchmark. (Canadian-focused equity funds are measured against a blended benchmark comprising portions of the S&P/TSX Composite, S&P 500 and S&P EPAC [Europe, Pacific, Asia and Canada] LargeMidCap.)
However, over the long term, the trend of widespread underperformance by equity managers holds.
Over three years, about 94% of Canadian equity managers underperformed; over five years, about 96% were worse than the index; and over 10 years, about 83% underperformed. For Canadian small- and mid-cap equity managers, those underperformance figures were about 52% (three years), 65% (five years) and 62% (10 years).
Over 10 years, the worst-performing category was Canadian-focused equity funds, with about 96% of funds underperforming. U.S. equity funds were a close second.
Over that period, 62% of Canadian small- and mid-cap equity funds trailed the benchmark — “technically the best performing category over the past 10 years,” the report said.
For full details, read the SPIVA Canada mid-year scorecard.