Legal and regulatory disclosures

A quick summary of the main findings can be found below. For a more in-depth insight please click here to read the full article. 

1. There is a vast range of performance between the best and worst passive funds due to the choice of index benchmark, charges, dividend policy, gearing, currency, tracking methodology and other features. For example, over just one year the best and worst passive funds in the Lipper Global Equity – Emerging Markets Global sector range from +35% to -1.5%!
2. The huge growth in the number of passives continued, increasing their influence on the average fund returns. Across the seven market groups we survey, in 1999 there were a total of 60 passive funds. By the end of 2019 this was 439, a seven-fold increase.
3. Also, over 20 years the average passive fund has underperformed when compared to a dominant reference index by an average of 52% over the five markets (two of the markets did not have a passive fund 20 years ago).
4. The best active equity managers have delivered as much as eleven times their index benchmark over 20 years.
5. An ‘agnostic’ approach that accepts that, over any sensible investing period, both can play a role at different times for different markets would seem to be underpinned by the data

All data is from Lipper Global sectors and is calculated in total return terms in sterling for periods ending 31 December 2019.