Managers perform but fail to add value
Active investment managers offering Australian and international funds have collectively failed to justify their higher management fees after only marginally outperforming their respective benchmarks.
Despite solid investment returns for all active equities managers, with the median Australian and international equities managers returning 11.3 and 5.7 per cent respectively for the 10 months ending April 30, benchmark outperformance has been poor.
The median Australian and international manager delivered 0.38 per cent and 0.34 per cent respectively above the index benchmark.
The figures, part ofIntech’s sector fund performance survey, led senior consultant at the group Andrew Korbel to state the performance of these managers was disappointing and that they had failed to earn their active management fees.
According to Intech a manager’s absolute performance will be primarily based on returns from the market and lower ranked Australian equities managers would rate in the top ten international managers list while the best Australian bonds manager would rank last in both equities rankings.
The reason for this is the Australian share market returned -0.3 per cent as measured by the S&P/ASX 200 as consumer discretionary, energy and health care did well (8.7, 5.1 and 4.5 per cent respectively) while material and banking lost value (-5.4 and -3.8 per cent respectively).
From this the median manager returned -0.4 per cent for the month of April withPortfolio Partners,PM CapitalandAberdeen Asset Managementleading the way (1.4, 1.2 and 0.9 per cent respectively).
The median international manager returned 3.1 per cent for the month, under-performing the benchmark by around -0.5 per cent and with the fall in the Australian dollar currency hedging in portfolios would have been negative for the month.
In fact unhedged international shares out-performed hedged investments by 3.6 per cent compared with -0.4 per cent respectively as measured by the MSCI indices.
Bond yields also rose with the bond market delivering a return of 0.9 per cent but the median manager out-performed the benchmark by 0.17 per cent this month and over the past 12 months has out-performed the benchmark by 0.63 per cent, the best result in over 8 years.
AUTHOR
Jason Spits
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