The semi-annual report from S&P Indices Versus Active (SPIVA®) once again demonstrates that the majority of mutual funds were outperformed by their benchmarks over the one-, three-, and five-year periods to June 30, 2013. Here are the statistics for the US equity funds

SPIVA® - Percentage of US Equity Funds Outperformed by Benchmarks

and global/international funds

SPIVA® - Percentage of International Equity Funds Outperformed by Benchmarks

The only category where active management prevailed was international small-cap.

The situation was similar in fixed income:

SPIVA® - Percentage of Fixed Income Funds Outperformed by Benchmarks

Over the five-year period, the investment-grade intermediate and, to a lesser extent, global income were the only two categories in which, on average, active management provided superior returns.

While valid, the above results paint only a partial picture of funds’ performance: the returns but not the risk. In contrast, Alpholio™, through its RealAlpha™ measure, clearly demonstrates how much value each fund added or subtracted on a truly risk-adjusted basis, i.e. with respect to a dynamic reference portfolio of exchange-traded products (ETPs).

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