Multi-asset  

‘Alternative analysis concerns’

The manager of multi-asset funds for Premier Asset Management said calculating sector averages by weighing the individual sizes of funds, rather than giving equal weight to all, showed active funds performing “better than expected”, beating the tracker average in six out of seven sectors for five-year returns.

Moreover, four of the so-called Premier Weighted sectors – compiled for a 14-page review of fund management in the UK – outperformed the tracker average by more than 10 per cent, with the biggest gap occurring in the Asia Pacific ex-Japan sector at 13.1 per cent.

Mr Evan-Cook said: “We believe the fund industry uses equally weighted averages because it is the easiest way of measuring its performance, not because it is the best. In doing so, it has created statistical distortions that have unwittingly handed the higher ground to passive investors.

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Matthew Allen, director of London-based Mulberry IFA, said: “Statistics can easily be skewed depending on what data you use and you will get different results for different sectors.

“We use a mix of passive and active, and in markets such as the US, we use exchange-traded funds because it’s difficult to outperform the index. It would not surprise me in many cases that active is worth paying extra for, but there is a place for both.”

Premier Weighted Sectorvs Index (%)vs Conventional Sector (%)vs Tracker (%)
Asia Pacific ex-Japan5.812.113.1
Europe ex-UK5.507.9
Global Emerging Markets7.69.210.3
Japan6.60.613.1
US-24.8-3.6-14.8
UK All Companies-1.2-2.20.7
UK Equity Income8.92.410.8
UK Smaller Companies11.24.4N/A*

*No suitable tracker available

Source: Morningstar