The majority of fund managers specialising in European equities were unable to beat the S&P Europe 350 index in the first quarter of this year, according to a report from S&P Global.
The first quarter of 2020 saw fund returns down 22.7%, while benchmark returns were down 22.4%, the report found.
An analysis of the data showed that to the end of January 2020 European equity funds had only lost 1% of their value on an asset-weighted basis, compared with a 1.3% drop in the S&P Europe 350 benchmark.
By the end of February, as the Covid crisis took hold, European fund returns were down 7.7% for the month, slightly better than the benchmark, which fell 8.6%.
At this point, it may have looked like active fund managers had the upper hand and were well placed to continue this outperformance into March.
However in March European funds lost 15.5% for the month compared with a 14.1% drop in the benchmark.
S&P Global said that March will go down in European stock market history as one of the most volatile months ever – surpassed only by October 2008.
The majority of European equity fund managers were unable to beat the benchmark in either March or Q1 2020 as a whole, with 66% and 57% underperforming the benchmark, respectively.
“The large proportion of underperforming active funds in March 2020 would suggest that despite their ability to time the market and extract value, fund managers broadly failed to utilize their skills and navigate the market in one of the most turbulent months,” S&P Global said in a statement.
“This is contrary to the widely held belief that market volatility provides a better opportunity for active managers to outperform.”
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