This article summarizes how often index funds outperform active funds using data from SPIVA (S&P Indices Versus Active scorecard).
Introduction
We often hear that "the majority of active funds underperform index funds."
I wanted to understand the concrete numbers:
- In which markets
- Over which time periods
- At what percentages
do active funds underperform?
This data is compiled from SPIVA, published by S&P.
All data in this article is sourced from the SPIVA website as of the publication date (November 1, 2023).
Note: This article was translated from my original post.
Win Rates: Index vs Active Funds
Summary
This chart shows the percentage of active funds in each region that outperformed their regional index benchmark over various time periods.
The trend clearly shows that active funds increasingly underperform their benchmarks over longer time horizons.
The underlying data is provided below.
United States
Percentage of All Large-Cap funds that outperformed the S&P 500:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 39.10% |
| 3 years | 20.20% |
| 5 years | 13.42% |
| 10 years | 14.39% |
| 15 years | 7.81% |
Europe
Percentage of Europe Equity funds that outperformed the S&P Europe 350:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 17.97% |
| 3 years | 10.71% |
| 5 years | 6.65% |
| 10 years | 7.16% |
Japan
Percentage of Japanese Large-Cap funds that outperformed the S&P/TOPIX 150:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 16.56% |
| 3 years | 18.02% |
| 5 years | 6.87% |
| 10 years | 15.54% |
India
Percentage of Indian Equity Large-Cap funds that outperformed the S&P BSE 100:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 16.67% |
| 3 years | 13.79% |
| 5 years | 7.14% |
| 10 years | 38.76% |
Australia
Percentage of Australian Equity General funds that outperformed the S&P/ASX 200:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 23.51% |
| 3 years | 42.57% |
| 5 years | 19.14% |
| 10 years | 20.86% |
| 15 years | 19.11% |
Canada
Percentage of Canadian Equity funds that outperformed the S&P/TSX Composite:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 21.79% |
| 3 years | 35.21% |
| 5 years | 5.48% |
| 10 years | 5.43% |
Middle East & North Africa
Percentage of MENA EQUITY funds that outperformed the S&P Pan Arab Composite:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 81.82% |
| 3 years | 58.62% |
| 5 years | 41.38% |
| 10 years | 15.15% |
Brazil
Percentage of Brazil Equity funds that outperformed the S&P Brazil BMI:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 23.95% |
| 3 years | 23.44% |
| 5 years | 25.45% |
| 10 years | 7.69% |
South Africa
Percentage of South African Equity funds that outperformed the S&P South Africa DSW Capped:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 52.50% |
| 3 years | 54.63% |
| 5 years | 50.24% |
| 10 years | 30.22% |
Mexico
Percentage of Mexico Equity funds that outperformed the S&P/BMV IRT:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 32.56% |
| 3 years | 29.27% |
| 5 years | 22.73% |
| 10 years | 15.00% |
Chile
Percentage of Chile Equity funds that outperformed the S&P Chile BMI:
| Period | Active Fund Win Rate |
|---|---|
| 1 year | 75.61% |
| 3 years | 31.11% |
| 5 years | 32.65% |
| 10 years | 6.98% |
Conclusion
This article examined the performance of index funds versus active funds using data from SPIVA.
While active funds show a reasonable chance of outperforming indexes in the short term, the data clearly demonstrates that they increasingly struggle to beat benchmarks over longer time horizons.
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