The performance of active US equity fund managers could be judged too negatively because of “questionable” analysis, Simon Clinch has said.
Mr Clinch, the manager of Invesco Perpetual’s US Equities Fund, said that recent criticism of active managers had been unfair because it viewed them alongside more passive strategies.
Writing a response to a magazine article on active managers’ performance which cited several pieces of research, he said: “It is based on datasets covering a broad universe of US equity mutual funds, as is much of the commonly read material available on this subject. But are these samples true representations of active portfolio managers?”
He said that much research and writing about the subject had classed “passive” or “closet index” funds as being active, meaning that the performance of “truly active” funds was being dragged down in analysis.
He said: “Out of 397 US equity mutual funds benchmarked against the S&P 500, the average active share is 78.7 per cent.
“We believe that truly active managers should have an active share ratio of above 80 per cent at the very least, and on this basis 188 of the funds in this group are ‘passive’ or ‘closet indexers’.
“That means fewer than half of the funds can be considered truly active, in our opinion.”
He added: “I would be the first to admit that the analysis above is hardly rigorous. But I think it needs to be shown that the basis for this negative view of active US equity fund management is questionable, at the very least.
“We are firmly in the camp of active managers, and by accepting the volatility and periods of underperformance that come with that style of management, we seek to deliver long-term outperformance.
“All we ask for is to be recognised as truly active managers, and not to be viewed alongside more passive strategies.”
Adviser view
Jonothan McColgan, director of Bath-based Combined Financial Strategies, said: “You get a huge range of different fund managers getting grouped together.
“The reality is people have to compare like with like.
