Monday, June 17, 2013


 AIM Equity Fund versus Benchmark (as of 12/31/2012)

S&P recently reported on the 1 year, 3 year, and 5 year performance of actively managed mutual funds versus various S&P indices:

According to the S&P report, “The year 2012 marked the return of the double digit gains
across all the domestic and global equity benchmark indices.  The gains passive indices made did not, however, translate into active management, as most active managers underperformed their respective benchmarks in 2012.”

“Performance lagged behind the benchmark indices for 63.25% of large-cap funds,
80.45% of mid-cap funds and 66.5% of small cap funds. The performance figures are equally unfavorable for active funds when viewed over three- and five- year horizons."

The students in the AIM program have also found the past five years to be a challenging period. The fund performance on an absolute basis was good; however, like the majority of actively managed small cap fund managers, the benchmark return exceeded the annualized returns of the AIM Equity Fund. The students (as well as the mutual fund managers) look forward to the period when active fund managers are rewarded for their fundamental analysis of individual firms.

The table (which can be enlarged if you click on it) shows the 1, 3 and 5 year returns of the AIM Equity Fund versus the benchmark.

The fund performance on a risk-adjusted basis (as measured by the Sharpe Ratio) indicates better results. Given the portfolio's average beta of about 0.90 and the lower overall portfolio standard deviation, the AIM Fund on a risk-adjusted basis matches or slightly exceeded its benchmark during the studied periods. 

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