As might be expected, overall performance of fund managers to a benchmark is significantly different between asset classes.
In emerging market equity, a look at the top 40% of managers shows they have all performed consistently well, beating the index by some significant margins.
However, emerging market equity is a difficult class to produce a benchmark for, so the scope for extremely varied performance is large.
Significantly, looking at a more de-veloped market like European equity, the first cut of the data looked at the top 40% of performing funds. Analysis of performance consistency for these funds relative to a hypothetical benchmark shows just over half beating the benchmark more than 50% of the time. This says there are an awful lot of managers out there underperforming.
One might expect this, though, bearing in mind the primarily retail backdrop to the European market, although many are also pitched up to institutional investors.
These retail funds will tend to have a much more focused investment strategy, and pay less attention to the benchmark, so less performance di-verge might be expected. Significantly, however, only a very few managers consistently beat the benchmark.
This could be due to the charging structure of the funds which demands outperformance to recoup the fees, which are high in comparison to institutional funds.
Furthermore, Europe as a region is a very difficult market to get right, and this should not be forgotten.
The performance figures look at the last three years, so the large cap ‘effect’ has been very pronounced; not just in the UK and the US, but in Europe as a whole.
Unless an investor picked a fund that was looking at this trend, underperformance comes as no surprise.
The trend in global equity reflects that of Europe, with only 20% of funds beating the benchmark more than 50% of the time.
One of the most interesting areas for examination, though, is that of US funds.
Looking at US equities, and particularly US bonds, only a very small proportion of funds are consistently beating the benchmark.
Amongst the US equity funds there are only around 10 out of 100 that outperformed the benchmark.
The importance of style, certainly from a marketing point of view, is great in the US - much more so than in Europe. And managers try hard to differentiate themselves in terms of style, and it appears that those managers performing well in the time period were focused on high-tech stocks.
It is important to bear in mind also the investment flexibility of these funds, which tend to have a wide scope for progressively altering in-vestment strategies .
What you buy today may not always be what you own tomorrow - so due diligence is key.
One of the most curious areas of analysis was that of US bonds. Using a government bond index benchmark - considered relatively conservative, we found that none of the managers bettered it.
Notwithstanding that many of the funds would invest in high yielding assets - corporate bonds, mortgage backed securities etc - surprisingly none could outperform.

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