LGIM's Onuekwusi rebukes S&P's active underperformance findings

Caused by sterling weakness

Justin Onuekwusi, multi-asset fund manager at Legal & General Investment Management (LGIM), explains why so many active funds underperformed last year.

This week, the S&P Dow Jones highlighted that nine out of 10 UK equity funds sold in Europe lagged their benchmarks in 2016. But it is important to contextualise this recent underperformance. In fact, over the longer term, UK equity fund managers have outperformed their peers in other regions in terms of delivering above-benchmark returns. So what could have caused the recent deviation? The answer: sterling. Following the vote to leave the European Union in last year's referendum, the relative price of sterling took more dives than a second-rate footballer. It quickly transpired...