SPIVA, is Standard and Poor 's bi-annual “Scorecard” comparing the performance of active-managers and their benchmarks. This is the 14th year and the SPIVA Scorecard has served as the de facto scorekeeper of the active versus passive depate. Once again the evidence is overwelmingly in favor of passive. As of 12/31/2015, the S&P Composite 1500 returned 1.01% while the S&P 500 returned 1.38%. During the same period 66.11% of active large cap managers under performed the S&P 500, 56.81% of mid-cap managers underperformed the S&P MidCap 400 and 72.2% small-cap managers underperformed the S&P SmallCap 600 respectivelly.
The numbers get worse for the last five-year and ten-year period. Over the five-year period 84.15% of large-cap managers, 76.69% of mid-cap managers and 90.13% of cmall-cap mangers lagged their respective benchmarks. Similarly, over the last ten-years 82.14% of large-cap managers, 87.61% of mid-cap managers, and 88.42% of small-cap managers failt do out perform thier respective benchmarks.
Over the last ten-years all international and emerging market equity categories underperformed their benchmarks. Please see the hole Spiva U.S. Scorecard year end 2015 at
http://us.spindices.com/documents/spiva/spiva-us-yearend-2015.pdf?force_download=true.
It has been our experience that most investors have 80% or more of their equity in the S&P 500. Investors believe they are diversified because they have and or all of the following: different funds, different fund families, different advisors, etc. Most of them are actively managed. The evidence shows that if they had opened their own account at Schwab, TD Ameritrade, Fidelity or other custodian and bought and S&P 500 Index fund like Schwab S&P 500 Index Fund SWPPX for .09% expense they would have out performed 80% of the professional active money mangers.
