Performance lagged behind the benchmark indices for 63.3% of large-cap funds, 80.5% of mid-cap funds and 66.5% of small cap funds.
Some fund managers, meanwhile, are shadowing their benchmark indices, hoping to hold on to their jobs amid record volatility in the stock market.
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Overall, double-digit gains across domestic and global equity benchmark indices did not translate equally into active management, as most active managers in most categories underperformed.
Active money managers are able to move away from the benchmark indices, easing up on sectors or companies that their in-house analysis says will underperform.
Moreover, our index has greater volatility than underlying benchmark indices.
The only consistent data point we have observed over the five-year horizon is that a majority of active equity and bond managers in most categories lag comparable benchmark indices.
The bullish bond market tone emanating from the report also sent shock through credit markets and caused a slump in recently rejuvenated benchmark stock indices.
Although a stock-picker who underperforms benchmark share-price indices will find himself out of a job, there are no benchmarks for investment consultants themselves.
In fact, Morningstar categorizes more than 60 municipal bond mutual funds as intermediate, of which several use one of the BarCap Municipal intermediate indices or similar index as a performance benchmark.
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Seems like NAREIT and FTSE are launching these indices in response to investor demand for a new benchmark and new investment vehicles that reflect interest in sustainable real estate projects.
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As more pan-European indices become available, some mediocre fund managers may compare their funds with the least challenging benchmark in order to beautify their performance, leaving clients in a marketing haze.
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