The gap between the best and worst-performing managers narrowed in the last financial year with the median Australian equity manager seeing outperformance.
According to Mercer, the median Australian shares manager generated higher returns than the ASX 300 index during the financial year.
The gap between the upper and lower quartile of managers had also narrowed compared to 2020.
The index returned 28.5% during the financial year and managers in the top quartile returned 33.4% while those in the lower quartile returned 27.2%. The median for the 137 funds was 30.5%.
The best fund was Forager Australian Value which returned 89% followed by Collins St Value and First Sentier Australian Equities Geared-Growth which returned 88.5% and 80% respectively.
Those funds which had performed below-median were mostly in the low volatility space such as AB Managed Volatility Equities and Acadian Australian Equity Managed Volatility.
However, when looking at performance over the three months to 30 June rather than one year, the median manager performance lagged the benchmark and underperformed by 0.5%. Top quartile managers exceeded the benchmark by a smaller rate than for annual figures at 0.4%.
“This marks a deterioration in benchmark-relative outperformance after three quarters of the median manager exceeding the benchmark,” Mercer said.
“Market trends and stock leadership seen in the first three quarters of the financial year saw some reversal in the last quarter. While cheaper cyclical stocks like Bluescope Steel and Boral continued to outperform, high growth stocks that had been sold down in the IT sector, such as Altium and Megaport, also staged a strong rally.
“As such, while value strategies like Maple-Brown Abbott Australian Share and Perpetual Australian Share Fund performed well, growth managers like ECP Asset Management and Hyperion Asset Management also outperformed the median manager in the June quarter.”
The top-performing sectors over one year were consumer discretionary, financials, IT and materials while detractors were healthcare, utilities and consumer staples while Commonwealth Bank was the largest stock contributor over one year followed by ANZ and Fortescue Metals.