S&P: Fewer Active Funds Beat their Benchmark in Q3 2009

    S&P Releases Q3 2009 Index Versus Active Fund Scorecard (SPIVA) for

TORONTO, Nov. 2 /CNW/ - Fewer active funds posted higher returns than their benchmarks in the third quarter of 2009, according to the latest results for the Standard & Poor's Indices Versus Active Funds Scorecard (SPIVA) for Canada released today. SPIVA is produced by Standard & Poor's, the world's leading index provider.

Between July and September 2009, only 36.0 per cent of Canadian Equity active funds and 31.8 per cent of active funds in the Canadian Small/Mid Cap Equity category beat the S&P/TSX Composite Index.

This quarter has been challenging for active funds with exposure to markets outside of Canada. Almost 70 per cent of the Canadian Focused Equity funds that outperformed the blended S&P/TSX Composite Index in Q2 posted returns below the index in Q3. While 61.0 per cent of U.S. Equity funds were able to outstrip the S&P 500 in Q2, results diminished in Q3 with less than half, 40.3 per cent, posting returns above the index.

"More and more Canadians have shown interest in passive investment and the index funds and ETF products available to them," says Jasmit Bhandal, director at Standard & Poor's Canada. "Every investment decision comes with an element of risk and SPIVA is designed to help investors do their homework."

As the average holding period for most investors is well beyond three months, a look at SPIVA's long term numbers will be most relevant for Canadians. Across all categories, the majority of active funds have been unable to exceed the returns of their respective benchmark. In three-year and five-year periods, only 12.1 per cent and 5.9 per cent, respectively, of actively-managed Canadian Equity funds have outperformed the S&P/TSX Composite Index.

For a comprehensive, visual explanation of the results, including an interview with Jasmit Bhandal, click here.

SPIVA reports the performance of actively managed Canadian mutual funds corrected for survivorship bias, and shows equal- and asset-weighted peer averages.


Many funds might be liquidated or merged during a period of study, which can skew results. However, for investors making an investment decision at the beginning of the period, these funds are part of the opportunity set. A key advantage of the SPIVA report is its correction for survivorship bias. For example, if there are 100 funds in the beginning of a five-year period and at the end of the period 20 have dropped out or merged leaving 80 left, then this would imply 80% survivorship.


The SPIVA methodology is designed to provide an accurate and objective apples-to-apples comparison of funds' performance versus their appropriate style indices, correcting for factors that have skewed results in previous index-versus-active analyses in the industry. SPIVA scorecards show both asset- and equal-weighted averages and include survivorship bias correction. Fund categorizations are as defined by the Canadian Investment Funds Standards Committee (CIFSC), and fund data is drawn from Fundata's mutual fund database. The complete Q3 2009 SPIVA scorecard for Canada is available on www.spiva.standardandpoors.com.

About S&P Indices

S&P Indices, the world's leading index provider, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1 trillion is directly indexed to Standard & Poor's family of indices, which includes the S&P 500, the world's most followed stock market index, the S&P Global 1200, a composite index comprised of seven regional and country headline indices, the S&P Global BMI, an index with approximately 11,000 constituents, and the S&P GSCI, the industry's most closely watched commodities index. For more information, please visit www.standardandpoors.com/indices.

About Standard & Poor's

Standard & Poor's, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for nearly 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com

SOURCE Standard & Poor's Canadian Index Operations

For further information: For further information: Jasmit Bhandal, Standard & Poor's, (416) 507-3203, jasmit_bhandal@standardandpoors.com; David R. Guarino, Standard & Poor's, (212) 438-1471, dave_guarino@standardandpoors.com

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Standard & Poor's Canadian Index Operations

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