Original, independent, thought leadership
CoWSep20220919 (002)

Actively managed ETF launches tick up even during period of underperformance

Observations According to the just released S&P Dow Jones Indices SPIVA report¹ that measures the performance of actively managed funds against their relevant S&P index benchmarks, 49% of actively managed large-cap domestic equity fund managers were able to outperform their corresponding benchmarks during the first six months of 2022. Or, put another way, 51% underperformed. …

Share This Article:

The Bottom Line:  Even as the majority of US and international equity managers continue to underperform, new launches of actively managed sustainable ETFs tick up.

Observations

  • According to the just released S&P Dow Jones Indices SPIVA report¹ that measures the performance of actively managed funds against their relevant S&P index benchmarks, 49% of actively managed large-cap domestic equity fund managers were able to outperform their corresponding benchmarks during the first six months of 2022. Or, put another way, 51% underperformed.  This was a period during which the S&P 500 gave up 19.96% and fixed income, as measured by the Bloomberg US Aggregate Bond Index, was down 13.91%.  
  • This represents a significant minority of active managers, and it puts actively managed large-cap US equity funds on track for their best (i.e., lowest) underperformance rate since 2009. Underperformance across US market capitalization ranges was even higher, with 54% of mid-cap and 63% of small-cap funds underperformed the S&P MidCap 400 and the S&P SmallCap 600, respectively.
  • As for international equities, a majority of actively managed funds underperformed in every category.  On the other hand, 93% of Core Plus Bond funds and 59% of actively managed high-yield US funds outperformed the iBoxx $ Liquid Investment Grade Index and iBoxx $ Liquid High Yield Index.  This was not the case, however, for other fixed income categories.  
  • There is no reason to believe that sustainable funds would perform any differently, yet interestingly, the latest interval of underperformance by US equity fund managers coincides with a pickup in the launch of actively managed sustainable ETFs.  As of August 31, 2022, there are a total of 74 actively managed ETFs with total net assets in the amount of $4.8 billion.  The segment is dominated by equity funds that account for 74% of funds by number and 71% of assets under management.  
  • During the eight month-interval since the start of the year, actively managed sustainable ETFs expanded by 13 ETFs, or 21.3%, while passively managed sustainable ETFs expanded by 10, or an increase of 6.5%.

¹ S&P Indices Versus Active (SPIVA) measures the performance of actively managed funds against their relevant S&P index benchmarks.

YOU MAY ALSO LIKE
$99.99
PER YEAR

Premium Articles Access Priority Support 1 Fixed Price

Free Trial
30 Day

Access to All Data No Credit Card Required Cancel Any Time

9.99
Monthly

Access to Premium Articles Priority Support Save 25%


Sign up to free newsletters.


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Research

Research and analysis to keep sustainable investors up to-date on a broad range of topics that include trends and developments in sustainable investing and sustainable finance, regulatory updates, performance results and considerations, investing through index funds and actively managed portfolios, asset allocation updates, expenses, ESG ratings and data, company and product news, green, social and sustainable bonds, green bond funds as well as reporting and disclosure practices, to name just a few.

A continuously updated Funds Directory is also available to investors.  This is intended to become a comprehensive listing of sustainable mutual funds, ETFs and other investment products along with a description of their sustainable investing approaches as set out in fund prospectuses and related regulatory filings.

Getting started

Many questions have surfaced in recent years regarding sustainable and ESG investing.  Here, investors and financial intermediaries will find materials that describe the various approaches to sustainable investing and their implementation.  While sustainable investing approaches vary and they have thus far defied universally accepted definitions, many practitioners agree that they fall into the following broad categories:  Values-based investing, investing via exclusions, impact investing, thematic investments and ESG integration.  In conjunction with each of these approaches, investors may also adopt various issuer engagement procedures and proxy voting practices.  That said, sustainable investing approaches will continue to evolve.

In addition to periodic updates regarding sustainable investing and how this form of investing is evolving, investors and financial intermediaries interested in implementing a sustainable investing approach will also find source materials that cover basic investing themes as well as asset allocation tactics.

Inesting ideas

Thoughts and ideas targeting sustainable investing strategies executed through various registered and non-registered sustainable investment funds and products such as mutual funds, Exchange Traded Funds (ETFs), Exchange Traded Notes (ETNs), closed-end funds, Real Estate Investment Trusts (REITs) and Unit Investment Trusts (UITs). Coverage extends to investment management firms as well as fund groups. 

Independent source for sustainable investment management company research, analysis, opinions and sustainable fund disclosure assessments