Aussie funds struggle to maintain performance in long term
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.
AUTHOR
Laura Dew
Recommended for you
Two former senior Global X employees have launched their own ETF provider, ETF Shares, focused on offering index ETFs for advisers and retail investors.
With GCQ Funds Management and Lakehouse Capital making their recent ETF debuts, the two fund managers unpack why financial advisers are essential to their respective launches.
ETF provider Global X is set to launch its latest ETF, focused on artificial intelligence infrastructure.
Index provider MSCI has unveiled two measures to make it easier for financial advisers and wealth managers to access transparent insights into private assets.
