Only 91 days left to Christmas and, for the movers and shakers in the fund management industry, we're close to "squeaky bum time". This is the part of the year where we begin to see who has delivered the goods and who has to start lining up their excuses for another year of underperformance.
And yet unlike in the Premiership title race -- which Sir Alex Ferguson's famous quote refers to -- fund manager performance should see quite an even distribution of winners and losers rather than just one overall victor. You would think it fair to presume that, among the active managers running equity market money, a decent percentage should be beating the index they are tracking, right? Well apparently not.
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In fact, as I pointed out earlier in the year in this column, active managers are for the most part are being trounced by passive, index-tracking products. Now it appears, this underperformance from active managers may be in part down to a "scandalous index cloning epidemic," according to a new report this week.
SCM Private's analysis has taken a sampling of 127 retail UK funds who are managing a combined £120 billion ($192 billion) and then looked at their performance compared with 227 US mutuals managing a combined £453 billion. SCM found that far from selling funds that were able to "beat the market (or index)," the funds were in many cases "highly unlikely to achieve the objectives marketed to investors".
Why? Well it appears that from the funds looked at "an average 40% of each fund is identical to the same index the fund is aiming to beat", and were charging some pretty high fees to clients for the privilege.
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The research adds that had investors used a low-cost index fund instead of these underperforming active funds, which were found to be "disguised index clones", they could have saved an estimated £1.86 billion in UK equity fund fees and over a billion in overseas fund fees in the past five years.
To underline the cloning accusation, the SCM report points out that only a quarter of the UK funds analysed were radically different to the index compared with 65% of US funds.
Among other things, the report also calls for far more transparency from the UK fund industry in reporting 100% of holdings more regularly -- it's been a requirement in the US to do so quarterly since 2004 -- and that the marketing of funds should be more honest about how much of its investment is merely tracking the index.
So as we close in on the final quarter of the trading year, I await with interest to see who has managed to actually beat the Footsie over the 12-month period and who has matched it point for point. Minus, of course the fat annual management charge.