Which Funds Perform Better In A Downward Market?

Yves SchoofBusiness

It’s the age-old debate between active and passive management, but which one performed better during the most recent financial crisis?

The conclusion of this US Morningstar article is that:

  • Across the 20 Morningstar Categories examined, 51% of active funds both survived and outperformed their average index during the first half of the year. In other words, an actively managed fund had a 50/50 percent change of outperforming a comparable index fund.


  • If we look over a longer term timeframe, in general, actively managed funds have failed to survive and beat their benchmarks, especially over longer time horizons. Only 24% of all active funds topped the average of their passive rivals over the 10-year period ended June 2020. However, success rates vary, and it is perfectly possible to find areas of the market where you have better odds of picking winning active funds.


Nevertheless, the signal that rings loud and clear in this data set is that investment fees matter.

The cheapest funds succeeded about twice as often as the priciest ones (34% success rate versus 16% success rate) over the 10-year period ended June 30, 2020. This not only reflects cost advantages but also differences in survival, as 65% of the cheapest funds survived, whereas 49% of the most expensive did so.

If there’s one near-certainty in investing, it is “you get what you don’t pay for,” as the Vanguard’s late founder Jack Bogle said.

Hence the rising popularity of ETFs and other index-type funds.

If you need some help constructing your portfolio, please contact me on 0432 885 295 or Yves@affluenceprivate.com.au


You can read the article HERE

Yves Schoof
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Yves Schoof

Author | Specialist Adviser for Medical Specialists and Surgeons at Affluence Private Wealth
I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.

As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.

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Please contact me on yves@affluenceprivate.com.au or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on LinkedIn to receive new articles.

Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. 

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