Only 1% of Australian high-performing funds have outperformed their benchmarks for five consecutive years, according to S&P Dow Jones.
In a report, S&P said 27.5% of high-performing Australian funds had maintained top-quartile rankings and 38.8% had consistently beaten their benchmark over three years.
The number fell dramatically over five years with just 1% consistently maintaining a top-quartile ranking and 2.2% consistently beating their benchmark.
“Out of the 201 top-quartile Australian active funds in 2016, only 1% remained in the same quartile in the next four consecutive years (2017-2020).
“The Australian Bonds fund category had the lowest turnover in the top quartile over five consecutive years, and no fund in the Australian Equity General, Australian Equity Mid- and Small-Cap, and Australian Equity A-REIT categories managed to stay in the top quartile for five consecutive years.”
Out of 167 funds which ranked in their top quartile in the five-year period ending December 2015, only 26.9% of them stayed in the first quartile in the subsequent five-year period to December 2020.
Top-quartile funds in the Australian Bond category had the highest persistence at 63.6% while Australian A-REIT had the lower persistence at 17.6%.
The report also noted that funds which ranked in the bottom quartile for the first three years were most likely to be merged or liquidated in the subsequent three years.
