Index Fund Adherents Point to S&P Scorecard

Standard & Poor's has just added more firepower to the debate over active management vs. index investing.

The novel way in which Standard & Poor's calculates performance data makes the results more meaningful for investors interested in how actively managed funds stack up against the relevant indices. The results will also offer a few surprises for those swayed by arguments that "we're in a stock pickers' market."

Introduced last week, the S&P Indices Versus Active Funds Scorecard, or SPIVA, provides both equal- and asset-weighted averages. The calculation also accounts for survivorship bias -- factoring in the performance of funds that were liquidated or merged, often because of weak performance.

Most performance comparisons are equal-weighted; that is, as a straight average. In other words, performance data from the $244 million (BGFIX Quote)William Blair Growth fund would count no differently than that of the $53.5 billion Fidelity's (FMAGX Quote)Magellan fund. ...