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6 out of 10 Spanish equity funds outperform the index

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For 20 years, S&P has generated the SPIVA Scorecard, which has been used to analyze the performance of actively managed funds relative to indices. They have expanded coverage to include Canada, India, Japan, Australia, Latin America, South Africa, and since 2015 they have included European equity funds from Italy, the Netherlands, Poland, Spain, Switzerland and the Nordic region.

Thus, in the SPIVA Scorecard of the performance of European active funds in 2021, despite COVID-19 as of 2021, European equities had outstanding results and surpassed with flying colors the extreme volatility of the previous year. Thus, the S&P Europe 350® up to 26.1% in 2021.

European indices reference they registered double digit performances in all areas, and many of them exceeded 20% during the period of one year. The picture was similar for fund managerswith all categories obtaining returns above the 10% for the year. However, few European fund managers outperformed the benchmark in 2021.

to go active european equity funds denominated in euros, the 74.8% higher and lower return that of the S&P Europe 350 in 2021 in absolute terms, although considering risk-adjusted returns, this percentage of managers that beat the index will worsen to 79.7%, which in a 10-year period rises to 84.33% of managers underperforming the index. This indicates the worst of 2018, when it reached 86.4% of funds that did worse than the index, more in 2019 it reached 70.4% and in 2020 up to a historic 37.34%, only seen in this Magnitude in 2015. The average ratio (without adjusting for risk) from 2012 to 2021 had been 62.2%, with 5 years below it (2012, 2013, 2015, 2017 and 2020).

As to eurozone Equity Funds, the ratio is better than that of European equities but above 50%, with which almost 4 funds out of 10 beat the reference index while 65.4% lag behind. The category with the worst performance has been US equities, something already known and that not only affects European managers but also Americans. Conversely, the best performing category, with 50% of stores beating the index, is UK equities.

The survival of the different categories of equities is of the order of 50% in the long term

In addition, the study takes into account the survival rate of the funds of the different categoriessince many of them are often liquidated or merged throughout the study period. SPIVA takes into account the entire opportunity set and not just the survivors, thus eliminating the survivor bias.

The survival rate is usually higher in the shorter terms, when in the long term it is significantly reduced. Could it be that they do not meet the needs of investors or that profitability does not favor them? A question that will be answered in another report, but in the case of European equity funds, with a total of 1,059 funds in a one-year period, the survival rate is 94.52%, in contrast to ten years, with a total of 1085 European equity funds, survival is reduced to 53.2%. In contrast, for Spanish equity funds, with the lowest number of funds (except RV Netherlands, which only has 15 funds), the survival rate is less than one year and similar to the rest in the other periods.

One in 5 Spanish equity funds beats its index

According to SPIVA data, the best performing funds relative to their index are Italian equity funds, as only 28.9% of funds do not beat the one-year index, followed by German equity funds with the 43.82% that does not beat the index and after Spanish equities.

An important factor in this behavior in European funds and especially in those markets where the value sectors (such as financials or energy and raw materials) represent an important part of the index, explains this behavior. Thus, in Spain during 2021 the funds with the best performance and that outperformed the Ibex were funds Horos, AzValor, Cobas, EDM and Magallanes, whose positioning finally paid off after years of drought for value-style investing.

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