Standard & Poor's on Thursday released its full-year scorecard on how many actively managed mutual funds beat their benchmark index in 2009. No surprise here: Just 39.2 per cent of Canadian equity funds beat the S&P/TSX composite index, an underperformance that fits in with other scorecards released by S&P.
At least investors are unlikely to complain too loudly this time around, given that funds generated big returns last year. According to S&P, the equal weighted return of Canadian equity funds was 31.3 per cent, versus a 35.1 per cent return for the index after dividends are included.
Longer-term, though, the results are more discouraging for mutual fund investors. Over three years, only 12.5 per cent of actively managed funds beat the index, and the average annualized return drops to a loss of 2.4 per cent. And over five years, just 7.45 per cent of funds beat the index, with an annualized gain of 4.5 per cent, versus a 7.7 per cent gain for the index.
For Canadian dividend and income equity funds, the results are even worse. In 2009, no actively managed funds beat the benchmark S&P/TSX Canadian dividend aristocrats index, which consists of stocks that have raised their dividends every year for at least five years. Over three years, 3.3 per cent of the actively managed funds beat the index, but the beat rate fall back to zero for the five-year period.
Hey, it's hard to beat the market.
David Berman