Aussie active equity managers lack persistent outperformance: SPIVA

Australian active equity fund managers struggle to persistently outperform in the medium term as those that shone four years ago failed to triumph in 2025, the new SPIVA Australia persistence scorecard reveals.

Among the Australian equity funds that were ranked in the top quartile in 2021, none of the equity funds managed to remain in the top quartile for all four subsequent years.

Four years ago, of the 17 top-quartile funds, only five (29.4%) retained their top quartile status, significantly surpassing the odds of a random distribution, the report covering the 2025-year end showed.

"Persistence in outperformance was rarer over longer time horizons. Among the top-quartile funds over the five-year period ending in December 2020, only 22.4% maintained their top-quartile status in the subsequent five-year period, while 46.6% dropped to the bottom quartile or were merged or liquidated," the report read.

However, fixed income fund managers showed some signs of skill, with several funds consistently outranking their peers in the medium term.

Australian bond funds proved "notably better persistence." Of the 17 top-quartile funds in 2023, seven (41.2%) remained in the top quartile each of the next two years.

Of the 17 top-quartile funds in 2021, five (4%) retained their top-quartile status, showing they significantly surpassed the odds of a random distribution.

The research asked if investment results can be attributed to skill or luck.

"Genuine skill is more likely to persist, while luck is random and fleeting. Thus, one measure of skill is the consistency of a fund's performance relative to its peers. The Persistence scorecard measures this consistency and reveals that, regardless of asset class or style focus, active management outperformance tends to be relatively short-lived," authors of the report said.

Across the ditch, 2025 also proved to be another challenging year for active funds.

In New Zealand, most funds underperformed relevant benchmarks across global and domestic equities, as well as domestic bonds.

Notably, 79% of New Zealand bond funds underperformed, marking a significant departure from their majority outperformance over the past four calendar years.

Despite relatively resilient results in the first half of 2025, active global equity funds lost ground in the second half with a 74% full-year underperformance rate.

Kiwi global equity fund managers posted an average return of 15.4% on an asset-weighted basis.  Global equity (hedged) funds returned 14.5%, with an 86% underperformance rate.

Over the 10- and 15-year periods, all funds underperformed in both hedged and unhedged categories.