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
Facebook Twitter LinkedIn

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.”

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Schroder European Alpha Income C Acc2.46 GBP-0.12Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar