Active Funds vs. the Indexes in Q3 2003

September 04, 2003

S&P's active vs. passive quarterly scorecard showed mixed results in the third quarter. Active funds beat S&P's large- and small-cap indexes while trailing in the mid-cap space -- but indexes win out over the long term.

New York – October 13, 2003.  Active mutual funds in both the large- and small-cap U.S. stock asset classes help up well in the third quarter, while mid-cap funds lost out to the index, according to research from Standard & Poor’s.

During Q3, slightly more than half (50.8%) of large-cap active funds beat the S&P 500. Small-cap funds did even better with 65.1% of active funds outperforming S&P SmallCap 600. The S&P MidCap 400 Index continued its dominance of the mid-cap category by outperforming 73.6% of active funds for the quarter, according to S&P.

Of the nine style boxes, S&P indexes beat active funds in the mid-cap styles (growth, value, blend) during the third quarter. In contrast, small-cap active funds outperformed their indexes across the three style segments. It was a split in the large cap category with growth and blend funds outperforming the benchmarks, while the S&P/Barra 500 Value Index beat active value funds.

However, over the last five years, the indexes were the clear winners. The S&P 500 has outperformed 53.4% of large cap funds, the S&P MidCap 400 has led 91.4% of mid-cap funds, and the S&P SmallCap 600 has beaten 69.4% of small-cap funds. Similarly, for the past three-year period, indexes have led 57.8% of large-cap funds, 70.2% of mid-cap funds, and 70.0% of small-cap funds, according to S&P.

Percentage of Active Funds OUTPERFORMED by Index

Fund Category
Index
One Year
Three Year
Five Year
All Domestic Funds
S&P SuperComposite 1500
59.19%
55.53%
50.76%
All Large Cap Funds
S&P 500
74.50%
57.84%
53.41%
All Mid Cap Funds
S&P MidCap 400
57.06%
70.15%
91.36%
All Small Cap Funds
S&P SmallCap 600
37.24%
69.95%
69.38%

Source: Standard & Poor's. For periods ending September 30, 2003. Outperformance is based upon equal- weighted fund counts.

The S&P 500 continued its positive performance during the third quarter of 2003 returning 2.7%, with a year-to-date return of 14.7%. All general equity fund styles showed positive returns for the quarter and year-to-date on both an asset- and equal-weighted basis.

The S&P quarterly scorecard examined the performance of over 2,000 general equity funds.

 

 

 

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