PASSIVE ASSET MANAGEMENT: SOME NUMBERS

 AM | @Mackfinance

"The rise of passive managers continues unabated" — John Authers

Most active fund managers do not beat their benchmarks: nine out of ten actively managed European equity funds failed to reach their performance goals over the last decade. In the US, around 80% of large-cap equity managers fell short of their index targets over the same period. These statistics have helped fuel inflows into index-tracking funds, including Exchange Traded Funds (ETFs).

. In the US, 32.4% of long-term funds' assets are managed passively, with $4.52tn under management, against $9.44tn managed actively. The share has roughly tripled since 1998.

. In 2015. Within equities, $169bn flowed out of actively managed funds, with $102bn of that finding its way to passive managers.

. In 2015. Vanguard pulled in $221bn, while BlackRock, including the iShares division, took in $103bn. Most of the traditional active managers suffered big outflows.

. Most funds are actively-managed. Only 15% of fund assets globally are managed passively, but there is an accumulation of data showing that investors face disappointment with active managers.

. Massive under-performance in emerging markets. Fewer than one in five UK small-cap and sterling-denominated emerging market fund managers beat their benchmarks over 10 years. Almost 98 per cent of euro-denominated emerging market funds underperformed over the same period. Fewer than half of the 489 UK equity funds and 1,192 European equity funds that were launched 10 years ago have managed to survive.

Sources. John Authers: "Passive asset managers are good corporate stewarts", Financial Times (21 January 2016); Chris Flood: "Nine out of ten active funds underperform benchmark", Financial Times (25 October 2015).
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