Last week, Investment Week analysed retail funds' performance relative to their benchmarks over 2014 so far, and the results made for grim reading.
Brighter spots, judged by various metrics, are the Global Emerging Markets and Asia Pacific sectors, where performance has been driven by overweights to the runaway Indian market.
But there is no doubt the sector and market-cap rotations seen over the past 12 months have made 2014 a difficult year for active managers.
This inability to beat the benchmark immediately brings to mind the US, long touted as one of the most difficult regions in which to outperform.
This inability to beat the benchmark immediately brings to mind the US, long touted as one of the most difficult regions in which to outperform
Whether that is borne out by the year to date figures is up for debate: 38% of IMA North America managers have beaten the S&P 500’s total return as of 2 December, according to FE.
This figure, while nothing in particular to boast about, is about average for the major equity sectors this year.
Instead, it is global equity funds which have suffered the most as a result of the US market’s strong returns. As of the start of this month, just 11% of the 260 IMA Global funds had beaten the total return of the MSCI World Index or FTSE All World indices.
Admittedly, some of this underperformance can be attributed to the make-up of the sector.
The disparate grouping of portfolios includes a number of global energy funds, which were never likely to outperform in a year when commodity prices have continued to slump.
But other sector-specific funds have helped flatter the overall figures. The three best performers are all healthcare funds - broadly speaking, managers of these portfolios have had to do little more than ride the wave of positive sentiment in biotechnology and beyond.
What has gone wrong for the rest of the sector? In short, it appears to be the runaway US market.
The S&P 500 looks set to post another year of double digit gains, and the US dollar's appreciation against the pound has boosted returns further. As of 26 November, the S&P is up some 19.2% this year in sterling terms.
For global managers, the crucial fact here is that US stocks make up 57% of the MSCI World index and 51% of the FTSE All World index.
It is reasonable to think even managers who thought US stocks looked particularly attractive at the start of 2014 would have struggled to square their global remits with a 60% US weighting.
The numbers bear that out. Fewer than one in 20 funds in the sector currently have a 60%+ weighting in the country, with fewer than one in four holding more than 50%.
The suspicion is, then, that most the sector has been underweight one of the most successful parts of their benchmark for large parts of 2014. That has made for a tough year for global managers.
