SPIVA Europe: Index vs. Active Management During Volatile Times

  • In a year of record volatility, active fund managers had an ideal opportunity to prove their worth. But did they?
Equity ETF Strategist

How did active managers respond to record volatility and soaring spreads in 2020 as the pandemic brought Europe to a halt?

  • Once again the report revealed that the majority of active fund managers failed to outperform their benchmark index last year. This was in spite of higher correlation and dispersion among equity returns, which should have helped those pursuing an active strategy.
  • Given the significant moves in markets in 2020, active managers provided little protection in Q1, when European equities suffered over a 30% loss and funds experienced a similar, if not worse, drawdown. This lack of effective tactical or defensive positioning, alongside the availability of increased index product ranges (particularly ETFs with their inherent cost advantages) is likely to support the ongoing switch of assets into indexed strategies.

The SPIVA Europe Scorecard measures the performance of actively managed European equity funds denominated in euro (EUR), British pound sterling (GBP), and other European local currencies against the performance of their respective S&P DJI benchmark indices over 1-, 3-, 5- and 10-year investment horizons.

Interview with Experts on Latest SPIVA Report

Tim Edwards and Andrew Innes of S&P DJI join Rebecca Chesworth of State Street Global Advisors and Pio Benetti of Kairos Partners SGR to explore the latest results from SPIVA Europe and the active and index investing landscape.

Source: S&P Dow Jones Indices, as at 18 May 2021