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Trackers triumph as active funds falter

Tracker funds have outperformed active funds across most equity markets over the past 12 months as the September 11 attacks caught out many active managers poised for a recovery, according to figures compiled by HSBC.

More than four out of five US funds failed to outperform the index over past year while European, Japanese and UK growth funds also dived in the performance stakes.

UK income funds emerged the most successful in the wake of September 11, with 96.7 per cent outperforming their benchmark over the year to September 28 compared with 74.3 per cent over the 12 months to the end of June 2000.

Just 16.9 per cent of US unit trusts outperformed the FTSE World-USA index over the 12 months to September 28 compared with 46.8 per cent over the 12 months to the end of June this year.

In the European sectors, over 75 per cent of funds failed to outperform their index over the year to the end of September while just 28.6 per cent of Japanese funds and 31.8 per cent of UK growth funds outperformed their indices.

The figures are more bad news for the industry suffering from plummeting sales post-September 11 as historically fund managers have generally outperformed the indices during falling markets.

HSBC says the figures reflect the optimism of fund managers before September 11, with many having positioned themselves for a recovery in equity markets.

However, cyclical stocks took significant falls in the wake of the terrorist attacks, leaving most active managers well short of their benchmarks.

HSBC says the particularly poor performance of US funds reflects the efficiency of US equity markets. In such markets, it says tracker funds are better investments.

Plan Invest joint managing director Michael Owen says: “There are still plenty of opportunities for fund managers to outperform in the US if you are a strong stockpicker. At face value, these figures make quite depressing reading but they highlight the importance of finding a quality manager and sticking by them.”


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