The only category where active management is winning

Active managers continue to struggle beating their benchmark indexes, but the performance of international small-cap managers might surprise you. Nine out of 10 international small-cap funds beat the S&P Developed Ex-U.S. Small Cap Index over the three-year period ended Dec. 31, according to the newly released S&P Indices Versus Active Funds Scorecard for 2012. Almost eight out of 10 have beaten it over the trailing five years and 85% outperformed in 2012. The findings were based on 61 international small-cap funds. Some of the top funds over that period were the Invesco International Small Company Fund (IEGAX), the Franklin International Small Cap Growth Fund (FKSCX) and the Goldman Sachs International Small Cap Fund (GISAX). International small-cap is the only equity category in which the S&P Dow Jones Indices report found the majority of active managers outperforming. Less than half of international and emerging-markets funds beat their respective benchmarks over the three-year period. Active managers fared the worst in U.S. stock categories. Only 14% of large-cap funds, 10% of midcaps and 17% of small-caps beat their respective benchmark indexes over the three-year period, according to Standard & Poor's.