S&P Dow Jones Indices have just released their latest SPIVA Australia scorecard for the period to the end of 2014.

The SPIVA Australia scorecard tracks the performance of actively managed funds against the benchmark indices over 1, 3, and 5 year periods. The latest scorecard assessed over 620 Australian equity managed funds, 280 international equity funds and 70 Aussie bond funds.

The results showed that the majority of small cap equity funds continued to outperform the relevant index which was the reverse for large cap equity funds.

The reasoning for this was lack of research:

Consistent observations of Australian small-cap funds beating their respective benchmark shows that small-cap stocks in the Australian market have been relatively underresearched compared to large-cap stocks, providing more opportunities for active asset managers to take advantage of any mispricings in this market. More than three-quarters of Australian small-cap funds beat the S&P/ASX Small Ordinaries over the past one year. The index recorded a loss of 3.8% in 2014, while funds in this category, on average, delivered a small profit of 2.1%.