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64% of managed funds fail to beat FTSE All Share

Almost two-thirds of actively managed investment funds failed to outperform the FTSE All Share index last year, according to a survey commissioned by Virgin Money.

The report by consultancy The WM Company found that 167 out of 260 active funds – 64 per cent – were beaten by the index before initial charges in 2001. In 2000, this figure stood at 48 per cent.

Virgin says the results show there is no evidence of consistent outperformance among active funds, despite claims that they tend to perform better in times of stockmarket difficulties.

It says that in three of the four years in which the stockmarket has recorded negative returns – 1990, 1994, 2000 and 2001 – the majority of managed funds failed to perform better.

But over the past 20 years Virgin claims more than 80 per cent of active funds failed to beat the index before initial charges.

It believes this is evidence that fund managers have timed their moves badly and failed to anticipate market falls.

Virgin spokesman Gordon Maw says: “This study shows that even when stockmarket conditions were supposedly more favourable for fund managers, the vast majority failed to beat the index.

“The picture over the past 20 years presents an even clearer case for the merits of index-tracking as 82 per cent of active funds failed to beat the stockmarket.”

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