Active equity funds are the clear winners in this year’s large ranking of active funds from Personal-Financial.com and the Freiburg fund and analysis company Greiff Personal-Financial.com Management. Of a total of 8073 active funds, less than two percent were able to meet the testers’ strict criteria this year – a total of only 158 made it into the list of excellent fund products, 122 of which are pure equity funds.
This will further reduce the number of funds that justify their higher fees for active management by an investment expert compared to passive index funds by better performance. In 2019, the study found 176 winners (2.13 percent of the total number of funds). The black December 2018, when the burgeoning trade conflict and economic worries spoiled the mood for investors, as well as the current corona crisis have spoiled the balance sheet for many fund managers. Only 54 of the previous year’s winners were able to assert themselves in 2020; in 2019, 83 funds managed to do so.
In addition to pure equity funds, the number of winners decreased in other areas. Mixed and absolute return funds in particular, which boast of their crisis resistance, performed poorly. Only four mixed funds made it onto the podium in 2020, compared to 18 in the previous year. After 15 excellent absolute return funds in 2019, there were only seven winners in 2020.
For the study, the Greiff Personal-Financial.com Management 2020 for the ninth time. Once created, the experts analyzed the performance of a total of 8073 active funds. The focus was on management activity and profitability over the past three, five and ten years. Of the bond, equity, mixed, commodity and absolute return funds examined in 146 subcategories, those that outperformed the benchmark index in sustained activity won. A maximum of five funds were selected for each category.
This is how the top list is created
A strict selection process ensures the high quality of the winners
The idea: The large fund ranking of Personal-Financial.com and Greiff Personal-Financial.com Management stands out: It is not just about finding the funds with the highest return in a period – because often enough the winners of a year quickly turn out to be rivets. Rather, the study examines long-term returns: “Our ranking filters out the funds that have consistently outperformed their benchmark. We are looking for the funds with the best reliable performance, ”says Greiff board member Schilling. Basically, the methodology has remained unchanged since the first year of the 2011 study.
The categories: Greiff analyzed 8073 funds for this year’s ranking. Fund of funds, guarantee funds and term funds are excluded. They are divided into seven main categories: mixed funds, bonds, stocks by country and region, stocks by sector and industry, money market, commodities and alternative funds, which include absolute return and long / short products. The study contains a total of 146 subcategories. These include standard areas like German stocks and more exotic ones like Indian stocks. This year, the number of funds examined is slightly lower than in the previous year, but the number is not of general significance: The number of funds analyzed fluctuates slightly from year to year, as funds are often closed or merged.
Factor 1 age: The performance of all funds has been tested and assessed over three, five and ten years. However, only offers that have a history of at least ten years have chances of a place on the list of winners.
Factor 2 activity: In the next step, offers were screened, the price trends of which are significantly similar to those of the reference index. Because an active fund should live up to its name and actually deviate significantly from the index to justify its higher fees – everything else is done by a cheap ETF. The average deviation of an actively managed product from its reference index is measured with the tracking error. The more courage the manager shows and the more he deviates from the index, the more active he is and the higher the value for the tracking error. Only those funds that have a higher tracking error than the median in all three periods have a chance of winning places.
Factor 3 success: In order to assess the quality of a fund, its performance is compared to the respective index. The central indicator is the so-called information ratio. It shows how much additional return the managers achieved in relation to the deviation from the index. If the fund outperforms the benchmark, the information ratio is positive. The higher it is, the more successful the fund is. Winning funds must have a positive information ratio in all three periods.
The winners: 158 funds passed the endurance test this year. We have selected 18 categories for the table and show a maximum of the five best funds. Within the categories, the winners are ranked according to the information ratio.
The seal: Award-winning funds have the opportunity to acquire a capital seal and use it to advertise themselves. You can find more detailed information on the conditions of these seals online at Personal-Financial.com/siegel
The large fund ranking was published in Personal-Financial.com 7/2020. interested in Personal-Financial.com? Click here for the Subscription shopwhere you can order the print edition. Our digital edition is available at iTunes and GooglePlay