There are numerous analyses that focus on the performance of active fund managers. The results are usually the same: only a few succeed in outperforming the market. However, a study conducted by Florian Ehrlinger reveals that this is not the case for all sectors, highlighting significant differences.
Florian Ehrlinger, the capital market analyst at HQ Trust and co-portfolio manager of “HQT Megatrends,” analyzed the post-cost performance of approximately 2,750 actively managed funds over the past 10 years. Ehrlinger categorized the products according to their three investment styles: value, growth, and blend – a category where the fund manager can select stocks from both areas. The analyst compared the fund returns with their respective MSCI indices: the MSCI ACWI Growth, MSCI ACWI Value, and MSCI ACWI.
“Over the past 10 years, fund managers in the growth sector managed to beat their respective benchmark index 6 times.”
“On average, the outperformance against the MSCI ACWI Growth during these years amounted to 4.2 percentage points.”
“It is worth noting that in all 6 years when growth managers outperformed the benchmark, growth stocks performed better than value stocks.”
“In 2020, the year with the highest growth outperformance, value managers had the highest underperformance.”
“The performance of the blend category is disappointing, with the average return surpassing the benchmark in only one year. Value managers achieved this feat only 3 times. This demonstrates the critical importance of professional fund selection.” “Not surprisingly, product costs have a significant impact on returns. Across all comparison groups, the average cost stands at 0.87%. With lower costs, many managers would achieve better results.”
