Funds struggling to maintain outperformance
Only 14% of ‘top-quartile’ Australian active funds have managed to consistently retain this rating over three years, according to S&P Dow Jones.
Latest data from the index provider to December 2019 found 14% of top quartile funds retained that rating over three years and only 1% retained it over five years.
Funds in the Australian real estate investment trust (AREIT) equity sector were least likely to remain in the top quartile over three years while Australian fixed income funds were most likely.
Across all fund sectors, only 15.8% of funds consistently beat their benchmarks over three years and 1.3% over five years. The most-consistent sector over three years was the Australian equity mid and small cap sector. For Australian equity funds, only 16 of the 145 funds which outperformed in 2017 continued to outperform in the subsequent two years.
Looking at outperformance over five years, of the 397 Australian funds which beat their benchmark in 2015, only five (1.3%) managed to repeat this outperformance over four consecutive years and there were no specific sectors which performed better than others.
S&P Dow Jones said funds that did outperform in the five-year period tended to have a lower liquidation rate in the subsequent five years across all categories.
Out of the 167 Australian funds which were top-quartile in the five-year period ending December 2014, only 15% of them were liquidated during the subsequent five years.
AUTHOR
Laura Dew
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
