The Ever-Depressing SPIVA: 2014 Mid-Year

The Mid-year S&P Dow Jones Indices SPIVA Canada Scorecard is out, and it’s everything that we’ve come to expect from the discretionary stock-picking world. But this time was unique even by our standards in that, for the first time in memory, not a single Canadian Dividend & Income equity fund outperformed it’s benchmark over the last 5 years.

Not one.

We often write about the difficulties discretionary fund managers have in persistently beating their benchmarks.  According to Vanguard, after correcting for survivorship bias, only about 19% of equity funds outperform their benchmark in any given year with the percentage predictably dropping as we look at longer and longer spans of time.  But in this case, to not have a single Canadian dividend and income fund outperform is pretty depressing.

We suppose this is as good a time as any to repeat what we’ve been saying all along:

  1. Discretionary stock-picking is a mug’s game; and,
  2. Even if you think you identified a “good” fund, it’s likely a mirage.
  3. The long-term performance is what you should be paying attention to anyways.  Any fund can get lucky over a year or two, but timeframes of 5 years or more are quite telling with regards to the overall ability of discretionary fund managers.

Please stop investing in these funds.  You deserve better.

Here’s the full report:

SPIVA Canada Scorecard Midyear 2014.pdf