Australian and New Zealand investment funds face benchmark underperformance

Active fund managers in Australia and New Zealand are facing significant challenges regarding benchmark performance. In Australia, approximately 78 per cent of actively managed equity funds lagged the S&P/ASX 200 Index during the first half of the year. The average active portfolio returned 0.2 per cent, compared to a 2.4 per cent gain for the benchmark. This underperformance is attributed to high market concentration, where the 20 largest companies account for over 63 per cent of the index, and a rotation from banking to mining stocks.

In New Zealand, analysis by Aurellan Asset Management has challenged the interpretation of S&P Indices Versus Active (SPIVA) data. While reports indicate that roughly 90 per cent of NZ-domiciled active global share funds underperformed their index, Aurellan found that nearly 75 per cent of passive global share funds also missed the benchmark by at least 1 per cent. Aurellan co-founder Anthony Edmonds criticized the use of ‘cherry-picked’ data, a practice he termed ‘index-washing,’ noting that neither active nor passive funds in the sample benchmark themselves against the specific S&P World Index used in the study.