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Special Report

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Equity funds gather momentum

On first glance at this quarter’s IPE/Lipper fund tables for institutional investors, one could forgive a few players for giving themselves a quiet pat on the back. Currently, there is much talk of active fund management making a come back (in the UK and US at least), but while it may be too early yet for pension funds to welcome them back, there can be no question that moves are afoot. And these figures certainly support that.
The number of US and global equity funds consistently beating the benchmark over a three year period has at least doubled since we last carried out this survey. In fact, the number of outperformers in the US equity category since May has increased by 200% with notable players Fidelity, Mercury, Credit Suisse and Dresdner entering the fray. US fund giant Fidelity put in far and away the most impressive set of figures - a 251% cumulative total return over three years as of at the end of July.
The S&P500 will take up a large proportion of a global equity benchmark which perhaps explains the equally impressive turnout of consistent outperformers here in the global equity category.
However, while the tables may show an increase in outperformers, they still remain more notable for their ab-sences. In the US equity fund sector , for example, the 33% we see here that did outperform the benchmark 50% of the time seem less impressive when you consider the 67% that didn’t.
On a second glance, therefore, it is clear the US stock index is still a formidable one and any suggestion of a return to power of active fund management seems slightly premature.
In contrast, the European equity fund sector is demonstrating more consistency, with funds continuing to bring home impressive figures - 64% of funds analysed succeeded in beating the benchmark 50% of the time, an increase of 14% against last quarter’s results.
The one asset class which was not represented in a table last time, was US bonds, simply because the benchmark proved too strong. While there has been no significant turnaround in performance since then, one manager has managed to beat it.

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