Investment companies should look to reduce the number of active funds they offer, according to AWD Chase De Vere following in-house research showing underperfomance in all but one key sector.
The research, released today, showed that over the last decade the average actively managed funds in the UK, Europe, US, Asia, Emerging Markets and Japanese mainstream equity sectors have underperformed their benchmark index by 8.66%, 15.65%, 11.27%, 45.55%, 67.67% and 19.93% respectively.
By comparison the UK small stocks sector outperfomed by 103.05%.
The research is in keeping with previous research conducted by the company, and on the back of such findings AWD Chase De Vere has reduced its active panel by about 10% over the last two years.
Commenting on the research, AWD head of of communications Patrick Connolly did not say whether it would lead to further reduction of active funds used by the company but said: "Our approach is and will remain a combination of active and passive portfolios."
He added: "But it is clear there are too many active products on the market and we would encourage investment companies to reduce the numbers."
One problem, according to Connolly, is that investment companies and advisers promote "flavour of the month" investment sectors, influenced by short-term performance and market sentiment when selecting funds, meaning they often invest just as performance peaks.
Connolly was quick to point out that this significant outperformance was true of ‘average' active funds while there are some funds and managers that consistently outperform such as AXA Framlington UK Select Opportunities, Cazenove UK Opportunities, Jupiter European, Threadneedle American Select, First State Asia Pacific and Aberdeen Emerging Markets.
"Our challenge is to pick those funds that will outperform in the long term, and out of the thousands of funds that are available there are a very small number that succeed," he said.
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