September 2018 – End of Month Update … and 2018 SPIVA Results

Slack Investor remains IN for US, UK and Australian index shares.

Justice Kenneth Madison Hayne reflects on the “Inexcusable greed and dishonesty” shown by segments of the finance industry – Image modified from the Brisbane Times

September heralds a change of season and there is some nervousness creeping into the Australian market (ASX 200 index -1.8%) as the Banking sector continues reeling from the interim report on the finance sector by Royal Commissioner and Slack Investor Hero – Kenneth Hayne . Wall St is steady (S&P 500 +0.4%) and the FTSE 100 has bounced back a little (+1.0%). However, the Slack Investor stop losses are not breached and decisions are put away till the end of October.

All Index pages and charts  have been updated to reflect the monthly changes – (ASX Index, UK Index, US Index).

SPIVA … What’s the score? 

Image result for roy and hg festival of the boot
Peerless sporting commentators Roy and HG – from The Roar

It is the end of season for winter football codes in Australia. Slack Investor welcomes back Roy Slaven and HG Nelson for brightening up his weekend and helping him keep score with their commentary on the “Festival of  the Boot” – This is a distraction, but you can get a taste of the genius of Roy and HG here, here or,  for a great Australian Bradbury moment here. For the “Festival of the Boot” here. It might be a sign of my perpetual immaturity, but I just don’t tire of these gentlemen.

One of the scorekeepers in the financial world are a group of boffins known as SPIVA (S&P Indices Versus Active). For 16 years they have been collecting world financial data and comparing actively managed funds to passive (Index) Funds – Slack Investor has looked at their findings before.
Their 2018 June report continues on the theme where (for a 5-yr period), almost 69% of Australian active funds failed to perform better than index funds. In the US, actively managed funds perform even worse with 84.23% of funds under performing the index over 5 years.
Over 5-years, 68.69% of AUSTRALIAN EQUITY FUNDS UNDER PERFORMED THE S&P/ASX 200  (Index ASX 200) – as of Jun 30, 2018 – From SPIVA Report 2018

The data reveals that there are some funds that beat the index,  but they tend to invest in small to medium sized companies. As Roy and HG would say … You would have to be in the “Dream Room” to ignore the power of the SPIVA message.

2 thoughts on “September 2018 – End of Month Update … and 2018 SPIVA Results”

    1. Yes Mawer Money – I really should have made more of this point. It might explain why low-cost ETF’s are booming at the expense of retail funds. There still seems to be some skill for some active managers with small to medium companies though.

      Reply

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