SPIVA: Active Funds Outperform in India and Japan, why?

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Tdubs
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SPIVA: Active Funds Outperform in India and Japan, why?

Post by Tdubs » Fri Mar 15, 2019 7:31 am

Another good year to be in index funds . . . except in India and Japan. Why might that be?

https://us.spindices.com/spiva/#/reports

Second question, I notice that SPIVA results are calculated net of fees, but exclude loads. Is this common practice? I realize that it would be hard to factor them into annual returns, but I'm surprised they aren't factored in somehow. How many actively managed load funds are out there boasting they beat the benchmark but leaving out that little detail? All of them, I assume.

SB1234
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Re: SPIVA: Active Funds Outperform in India and Japan, why?

Post by SB1234 » Fri Mar 15, 2019 8:09 am

I am only going to venture an answer for your first question. I think in both countries the benchmark has much fewer stocks compared to the total number of listings. So it may be the case that the active fund are getting more exposure to the small size factor.
Also am not really sure if the markets in india are as efficient as the developed country markets.
Very inreresting question though. I am sure the experts on this forum will have a much clearer explanation.

Thanks and hope this helps.

-
SB

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Tdubs
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Re: SPIVA: Active Funds Outperform in India and Japan, why?

Post by Tdubs » Fri Mar 15, 2019 8:17 am

I had similar explanation as you for India's deviance, but Japan with its mature markets and economy seems harder to explain.

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Re: SPIVA: Active Funds Outperform in India and Japan, why?

Post by pkcrafter » Fri Mar 15, 2019 9:40 am

When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Tdubs
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Re: SPIVA: Active Funds Outperform in India and Japan, why?

Post by Tdubs » Fri Mar 15, 2019 9:52 am

For Japan, that article isn't all that contradictory. The one I cited shows out performance at 5 years (compared to everyone else, that is good). The article you cite is singling out particular active sectors that performed poorly--their international funds.

Their active domestic funds, even at 10 years, do better than their counterparts in the U.S. Almost 40 percent outperform in Japan, while it is typically single digits in the U.S.

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SlowMovingInvestor
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Re: SPIVA: Active Funds Outperform in India and Japan, why?

Post by SlowMovingInvestor » Fri Mar 15, 2019 11:24 am

When you have a lot of markets around the world, active funds might outperform in some through sheer chance, yes ?

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Tdubs
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Re: SPIVA: Active Funds Outperform in India and Japan, why?

Post by Tdubs » Fri Mar 15, 2019 3:04 pm

Year to year, sure. But over five years in the 3rd largest economy in the world? The difference seems significant. I thought there might be a technical explanation related to the indexes used. Or, perhaps Japan's markets are not as transparent as in the U.S. or Europe?

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