S&P Releases Special Edition Bear Market SPIVA

    Majority of Active Funds Underperform Indices During Last Bear Market

    TORONTO, Aug. 5 /CNW/ - Standard & Poor's Index Services, the world's
leading index provider, released today the results of its first study on the
performance of indices versus active Canadian funds in bear markets. The
report, which focuses on the period August 2000 to December 2002, seeks to
compare the performance of indices versus active mutual funds during a bear
market. The findings are part of a special edition of Standard & Poor's
Quarterly produced Indices Versus Active Funds Scorecard (SPIVA) for Canada.
    According to Standard & Poor's research, only 38.9% of Canadian Equity
active mutual funds outperformed the S&P/TSX Capped Composite Index during the
last bear market period from August 2000 to December 2002. Active funds in the
Large Cap Equity category saw similar results with only 34.4% beating the
S&P/TSX 60 Capped Index. Canadian Small Cap Equity funds fared the worst
domestically, with only 30% of active funds outpacing the S&P/TSX SmallCap
    "Conventional wisdom says that active mutual funds perform better than
indices during a bear market. While we found that the average return of active
Canadian Equity mutual funds was better, this reflects the strong performance
of only a few funds," says Jasmit Bhandal, director at Standard & Poor's Index
Services. "The report shows that the majority of Canadian Equity funds still
underperformed their benchmark."
    SPIVA reports the performance of actively managed Canadian mutual funds
corrected for survivorship bias, and shows equal- and asset-weighted peer
averages. Over the August 2000 - December 2002 period, the majority of
International, Global Equity, and U.S. Equity funds have come in below their
index returns for each category (the S&P/Citigroup EPAC PMI, S&P/Citigroup
World PMI and S&P 500 indices respectively). Global Equity funds fared the
best with 45.9% beating the S&P/Citigroup World PMI Index.
    Survivorship SPIVA reports also include a survivorship bias correction to
account for funds that may have merged or been liquidated during the period
under study. Survivorship over August 2000 - December 2002 is 72.2% for
Canadian Equity, 96.9% for Canadian Large Cap Equity, 74% for Canadian Small
Cap Equity.

    About SPIVA

    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 to
account for funds that may have merged or been liquidated during the period
under study. 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 SPIVA Bear Market Report for Canada is available on

    About Standard & Poor's

    Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:  MHP), is
the world's foremost provider of financial market intelligence, including
independent credit ratings, indices, risk evaluation, investment research and
data. With approximately 8,500 employees, including wholly owned affiliates,
located in 23 countries, Standard & Poor's is an essential part of the world's
financial infrastructure and has played a leading role for more than 140 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.

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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