Investec's Mundy: Fund performance skewed by benchmarks and survivorship bias

Fund performance skewed by benchmarks

Fund managers' performance may appear to have improved recently, but the industry's choice of benchmark and 'survivorship bias' is working in their favour, according to Investec's Alastair Mundy.

The manager of the £1.4bn UK Special Situations fund said the average fund in the IA UK All Companies sector comfortably outperformed the FTSE All Share index over the past five years; a "creditable result" compared to the performance of fund managers in previous decades. However, Mundy (pictured) said this performance is "unusual" and the funds' benchmark could be the reason behind the improved performance. "It seems that the most likely cause of improved performance is the industry's choice of benchmark. "For example, all open-ended funds could be overweight mid-caps and small-ca...