S&P Dow Jones Indices: Active Managers Across Developed Equity Markets Are Facing a Challenging 2024

In its global S&P Indices vs. Active (SPIVA) Scorecard, S&P Dow Jones Indices (S&P DJI) reports a tough period for the active management industry in the first half of 2024, most notably for funds focused on U.S. or global equities.

Today, October 8, S&P DJI published a consolidated report tracking the performance of actively managed funds versus their respective benchmarks across various time horizons, applying a global lens. The environments facing active managers in different global markets can share common dynamics; meanwhile, many investors seeking to diversify abroad are able to choose between local or foreign-based managers.  To reflect the interconnectedness of markets, ongoing global growth of indexing, and the increasingly global nature of investment management, for the first time this Mid-Year SPIVA report aggregates the key results across major markets to offer a single global scorecard for the first half of 2024.

According to the report’s findings, over the six-month period ending June 2024:

• Across the 56 equity and fixed income fund categories included in this report, a majority of funds underperformed in over two thirds (68%) of categories. 
• Of the 8,417 unique funds represented across all the half-year statistics, a similar near-two thirds figure, (64%) of individual funds underperformed their assigned benchmark.

Global Equity Funds

• A majority of Global Equity funds domiciled in each of the U.S., Europe, Japan, Canada and Australia underperformed the S&P World in local currency terms, with underperformance rates all falling within the range of 70%-85%.
• Part of the disappointing performance of actively managed Global Equity funds may have been down to the difficulty of outperforming in the U.S. component, with majorities ranging between 57% to 78% of U.S. equity-focused funds in the U.S., Europe, Japan, and Canada underperforming the S&P 500^®.

Powered by mega-cap outperformance and AI-related optimism, U.S. large-cap equities surged in H1 2024, as markets shrugged off inflation concerns and uncertainty over the timing of Fed rate cuts.

“Amid this environment of large-cap outperformance, 57% of all active large-cap U.S. equity managers underperformed the S&P 500, a relatively benign result that was consistent with the better-than-might-be expected record also observed in 2023,” said Anu Ganti, Head of U.S. Index Investment Strategy at S&P Dow Jones Indices. “But a silver lining may have been in the clouds for U.S. small-cap funds, who posted stellar performance in H1, with 85% of funds outperforming the S&P SmallCap 600.”