This undermines the widely-held view that active managers generally underperform tracker funds. Chase de Vere said the research shows that despite having much lower charges than actively managed funds, trackers don’t necessarily provide good value for investors.

The only region where a passive approach clearly produced above average performance was in North America. The US market is large and efficient and it has historically been difficult for active managers to outperform. Research from index provider S&P Dow Jones last year found only 3% of actively managed US equity funds beat the S&P 500 index over the 10 years to the end of June 2016.

The group looked at the five and 10 year performance of the mainstream tracker funds; these were then compared with the performance of the other funds in their relevant investment sector. (Performance as at 7 August 2017. Source: FE Trustnet).

Patrick Connolly, certified financial planner, Chase de Vere, said: “The popularity of tracker funds is due to their low charges and the general perception that this should result in them performing well over the longer-term. However, our research shows that this could be an incorrect assumption.

“With the exception of North American and UK Mid Cap investments, no tracker fund has generated first or second quartile performance over the past 10 years. This means these funds have produced below average long-term performance.

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“In part this is probably because active funds are likely to have a higher weighting in mid and small cap stocks and these should, over the longer-term, out-perform larger companies, which will usually be more heavily represented in trackers.”

In general, trackers have done well over the past 12 months because larger stocks – which are heavily represented in indices such as the FTSE 100 or S&P 500 – have done well. The performance of active and tracker funds will tend to be cyclical. If one has outperformed for a period of time, leadership will swap to the other. However, most surveys suggest that funds must be truly ‘active’ to add value. This may be shown by a large ‘active share’ (which is quoted by most fund managers).

UK All Companies

Tracker fund	5 years	Ranking	Quartile	10 years	Ranking	Quartile
Fidelity Index UK	+62.3%	160/225	3	+72.9%	127/188	3
HSBC FTSE-100 Index	+55.5%	189/225	4	+66.2%	143/188	4
HSBC FTSE-250 Index	+99.4%	47/225	1	+121.2%	38/188	1
HSBC FTSE All-Share Index	+63.2%	153/225	3	+74.7%	119/188	3
iShares 100 UK Equity Index	+56.6%	184/225	4	N/A
iShares Mid Cap UK Equity Index	+100.3%	45/225	1	N/A
iShares UK Equity Index	+63.9%	150/225	3	+78.5%	106/188	3
L&G UK 100 Index Trust	+55.8%	187/225	4	+70.2%	130/188	3
L&G UK Index Trust	+64.4%	149/225	3	+80.1%	103/188	3
Scottish Widows UK All Share Tracker	+64.4%	148/225	3	+75.8%	114/188	3
Vanguard FTSE UK All Share Index	+63.1%	155/225	3	N/A
Virgin UK Index Tracking	+50.1%	208/225	4	+60.8%	155/188	4

Europe

Tracker fund	5 years	Ranking	Quartile	10 years	Ranking	Quartile
HSBC European Index	+107.4%	44/88	2	+83.1%	46/65	3
iShares Continental European Equity Tracker	+105.9%	50/88	3	+84.9%	45/65	3
L&G European Index Trust	+123.7%	23/88	2	+89.5%	37/65	3
M&G European Index Tracker	+100.8%	65/88	3	+63.7%	55/65	4
Vanguard FTSE Developed Europe Index	+105.4%	51/88	3	N/A

North America 

Tracker fund	5 years	Ranking	Quartile	10 years	Ranking	Quartile
HSBC American Index	+130.5%	29/89	2	+199.9%	23/65	2
iShares North American Equity Tracker	+130.8%	28/89	2	N/A
L&G US Index Trust	+129.9%	30/89	2	+213.0%	13/65	1
Vanguard US Equity Index	+131.2%	26/89	2	N/A

Asia ex Japan 

Tracker fund	5 years	Ranking	Quartile	10 years	Ranking	Quartile
HSBC Pacific Index	+64.7%	56/74	4	+118.9%	35/54	3
iShares Pacific Equity Tracker	+65.5%	54/74	3	+127.4%	31/54	3
L&G Pacific Trust	+65.9%	53/74	3	+127.8%	29/54	3
Royal London Asia Pacific ex Japan Tracker	+65.2%	55/74	3	+117.6%	36/54	3
Vanguard Pacific ex Japan Stock Index	+60.6%	62/74	4	N/A

Japan

Tracker fund	5 years	Ranking	Quartile	10 years	Ranking	Quartile
HSBC Japan Index	+101.8%	28/52	3	+81.3%	28/43	3
iShares Japan Equity Tracker	+103.6%	25/52	2	+86.2%	25/43	3
L&G Japan Index	+103.3%	26/52	2	+84.7%	27/43	3
Vanguard Japan Stock Index	+100.2%	32/52	3	N/A

Emerging Markets

Tracker fund	5 years	Ranking	Quartile	10 years	Ranking	Quartile
iShares Emerging Markets Equity Tracker	+48.5%	40/66	3	N/A
L&G Global Emerging Markets Index	+48.6%	39/66	3	N/A
Vanguard Emerging Markets Stock Index	+49.1%	35/66	3	N/A