Don't Buy Passives for Best Returns in European Equities

Schroders' James Sym questions the received wisdom that few actively managed funds beat ETFs and finds that when it comes to European equities, you get what you pay for

Emma Wall 6 October, 2017 | 11:15AM

Very few active funds outperform the stock market – you’re better off getting a low-cost passive fund, right? Wrong. At least, not when it comes to European equities. Schroders fund manager James Sym used Morningstar data to track the performance of active and passive funds within his European equities sector and found that higher-cost active funds persistently outperformed.

“There is a lot of data out there which seems to show that only a small number of actively managed funds beat their benchmark and that many investors are better off simply buying an ETF which tracks an index,” he said at the Schroders investor conference last week.

“That might be true for the US market, but for European equities that simply isn’t the case – even the average active fund outperforms the index. In fact, since 2002, looking at rolling five-year performance even those European equity funds which are below average in their peer group sector outperform the index tracker average. And this is after fees.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Schroder European Alpha Income C Acc160.00 GBP0.38

About Author

Emma Wall  is former Senior International Editor for Morningstar

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