Active management edges out passive performance in Q1
Passive outperforms over five years
Active managers beat passive products over Q1 2020 by a slim majority (54%), but have trailed significantly over the past five years with just 32% of active managers outperforming, according to a recent study from Albermarle Street Partners.
Over the first three months of the year, active managers in sectors with "larger inefficiencies or the ability to move between different countries" performed best against their passive counterparts, with over 80% of IA Asia Pacific ex Japan and IA UK Smaller Companies managers outshining the ETF option.
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At the other end of the scale, less than half of active managers were able to outperform passive products in IA UK All Companies, IA Japan, IA North America and IA Global Emerging Markets.
Albermarle's Active Payback research details whether the additional fees charged by active managers provide value for investors by calculating in pounds and pence how much a fund or fund group earned for its investors, after fees, above an "appropriate passive comparison".
During Q1, an investor with Ardevora UK Equity would have earned £0.20 more than one invested in a passive equivalent, the best performer across the industry.
Morgan Stanley US Growth outperformed by £0.17, Invesco Asia Consumer Demand by £0.15, LF Miton UK Smaller Companies by £0.14 and Baillie Gifford American rounds out the top 5, also with £0.14.
Baillie Gifford American also features in the rankings over the past five years, topping the table with "Active Payback" of £1.31, closely followed by Legg Mason IF Japan Equity at £1.21. Morgan Stanley Global Opportunity takes the bronze position, with outperformance of £0.94.
Ranking in both the Q1 and five year tables, Baillie Gifford also tops the table in "Firm-wide Asset-Weighted Active Payback", with the house as a whole providing additional returns, net of fees, of £0.40 more than a passive counterpart.
Morningstar data shows flow of assets from active to passive in 2019
Marlborough Fund Managers were just edged out, taking second with £0.36 "Active Payback", while T. Rowe Price UK (£0.23), Baring Fund Managers (£0.16) and Columbia Threadneedle (£0.11) fill out the five best performing houses.
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