Active strategies outperform over longer term
Australian active share strategies deliver significant outperformance over the benchmark over longer-term periods, the latest Australian Shares Performance Survey from Mercer has shown.
The survey showed the overall median manager outperformed the S&P/ASX 300 Accumulation index over the three months and year to 31 March 2018 by 0.5 per cent and 2.1 per cent, respectively.
Over longer-term periods, the survey showed active management strategies achieved excess returns before management fees above the index of 1.4 per cent per annum over the past three years, and 1.5 per cent per annum over the five years to March 2018.
Mercer said these results are well in excess of the median published fee for Australian shares wholesale unit trusts of 0.72 per cent per annum, evidence supporting the use of active management in this asset class.
Yee Hou Seck, an Australian equities researcher in Mercer’s Manager Research Group, said the strategies that performed strongly for the year to 31 March 2018 continued to be growth and quality-focused stock pickers.
“Looking at the portfolios of two of the top five performers, Platypus Australian Equities and Bennelong Concentrated Equities, both are relatively more concentrated with higher active risk than the broader universe of managers,” he said.
Interestingly, both managers entered 2018 with zero holdings in index heavyweights, Commonwealth Bank and ANZ, Seck said.
“This highlights the benefit of a less constrained, high-conviction investment style.”
The survey covered over 160 different Australian shares investment strategies offered by around 70 different fund managers, Mercer said.
Recommended for you
The latest budget papers have outlined a $10 million provision for ASIC greenwashing enforcement activity as well as funds for a sustainable labelling regime to be partially met by industry levies.
Betashares has expanded its fixed income solutions with the launch of a new ETF offering exposure to subordinated bonds issued by the big four Australian banks.
The latest monthly Bank of America global fund manager survey has found investors are starting to shift cash into bonds as cash allocations reach a three-year low.
AUSIEX analysis has discovered the net traded value of Australian dollar fixed income ETFs more than doubled from January to April, reflecting growing investor demand.
