Why Do Global Equity Managers Struggle to Perform?

Over the past decade, the vast majority of investors in Global Large-Cap Blend funds have paid fat active management fees for the pain of losing to an unmanaged index

Christopher J. Traulsen, CFA 20 July, 2016 | 8:00AM
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Global equities give active managers a broad, deep pool of stock in which to manoeuvre. One would think, therefore, that they could showcase their abilities reasonably well here. Sadly, most have not done so. The record of futility is striking. Looking at the oldest share classes of funds in the Morningstar Global Large-Cap Blend category we see that as of May 31, 90% of the peer group lagged MSCI World over 10 years, 92% lagged the index over five years, and 89% lost to the index over three years.

Over the past 10 years, US stocks have surged ahead, whilst European issues have sagged

The Morningstar category includes funds from across Europe, irrespective of whether they are available in the UK or not. This gives us a large number of offerings to compare, but as cross-border funds in particular tend to be costlier than UK domiciled offerings, it’s worth seeing how UK domiciled offerings fared.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Dodge & Cox Worldwide Global Stk GBP Acc35.59 GBP-0.45Rating
Vanguard FTSE Dev Wld ex-UK Eq Idx £ Acc545.64 GBP0.82Rating
Veritas Global Focus A GBP61.63 GBP1.40Rating

About Author

Christopher J. Traulsen, CFA  is director of fund research, Europe and Asia, Morningstar.