11/05/2009
World - Strong performance of actively-managed funds will not last, says iShares
Actively-managed funds may create alpha, but this outperformance is not sustainable, concludes a study by iShares, a firm specialised in ETF funds (currently up for sale by its owner, Barclays).In 2000, nearly 39% of equities and fixed-income funds analysed by iShares (representing EUR750bn) outperformed their benchmark, while equities funds scored even better, with 42% doing so. Between 2000 and 2008, between 25% and 39% of the products under review outperformed their benchmarks.But this outperformance is not always lasting. iShares cites the example of the year 2005, when 24% of all funds performed better than their indexes. In 2002, 57% of all funds managed to outperform their benchmarks, and the following year, only 30% did so.In these turbulent times, the demonstration is even more striking. Taking equities funds in 2006, 38% did better than their index. But only 51% of these funds outperformed their benchmarks in 2007, and only 14% in 2008. iShares goes on to demonstrate that ETFs (in this case their own) have a tendency to outperform, and that this outperformance is sustained over time.This leads iShares naturally to recommend that ETFs be included in funds of funds, at least in the core portion of the portfolio, as some management actors are already beginning to do (see interview with Bernard Aybran of Invesco). Eric Wohleber, director of iShares France, says this is a means by which ETF funds will be able to reach ?passive? clients.
