The year 2022 in particular could have meant an opportunity for active managers.
(Photo: Moment/Getty Images)
Frankfurt New figures confirm a well-known phenomenon: According to an evaluation by the fund analysis company Morningstar, active funds, i.e. funds controlled by fund managers, were unable to convince their significantly cheaper competition, the index funds ETF, even in the past difficult stock market year. The success rate of actively managed funds based in Europe “did not impress” in 2022, summarizes author Dimitar Boyadzhiev.
On average, active fund managers performed even worse over the long term – ie over a period of ten years. This is shown by a study of 26,000 active and passive funds whose providers are based in Europe. With assets of EUR 5.1 trillion, the products cover half of the European fund market.
Boyadzhiev believes that the year 2022 in particular, which brought investors double-digit losses on international stocks and bonds as a result of war turmoil, the energy crisis, recession worries and rising capital market interest rates, could have meant an opportunity for active managers.
In such an environment, one might have expected active managers to outperform their passive competitors more easily, he points out. Because these usually take the entire downward trend on the stock exchanges with them.
On average, however, the fund managers were disappointing: just 29 percent of the equity funds from 43 categories examined by Morningstar performed better than their ETF competitors. A majority of fund managers were more successful in only three categories: funds with Canadian and Turkish equities and with US blue chips. Bond funds were somewhat stronger: around half of the funds performed better than ETFs in 2022.
The result over the past ten years is even worse: Just 17 percent of equity fund managers and only 23 percent of bond fund managers have achieved higher returns than their ETF competitors. In nearly two-thirds of the categories Morningstar surveys, fewer than 25 percent of fund managers managed to outperform index funds.
The majority of fund managers outperformed their respective ETFs in just four asset classes: global high-yielding equity funds, UK high-yielding equity funds, emerging market equity funds and Swiss real estate funds.
More: These are the most popular index funds in Germany.