The new S&P Index vs. Active report is out. It might be a game changer, if you can cut through the spin.

I’ve professed my unbridled love for the Standard & Poors Index vs. Active scorecard many times. It’s simply the best, most consistent, most fair-minded way we have of really analyzing the active vs. passive management debate. We write about it every six months when it comes out (and indeed, we reported it here last week.)

I still love it, but I have to say, the PR folks at Standard &Poor’s should tuck in their shirts, because their bias is showing.

It’s not the data. The data are great. It’s the headlines.

In the 2008 year-end report, the introductory text crowed about the one-year results. “The belief that bear markets favor active management is a myth. A majority of active funds in eight of the nine domestic equity style boxes were outperformed by indices in the negative markets of 2008.”

So how is it that the 2009 report carries the headline “Annual Matchups – No Clear Trends” and this rather hedgy text: “Short-term outcomes (such as periods of 12 months or less) of the index versus active debate are less consistent than longer-term outcomes. This notion is demonstrated by the active versus index matchup for each of the last 10 years.”

Why not just let the data speak for themselves, and perhaps use a headline that actually reflects the news, such as:

"2009: Best year in a decade for active management"

Because, let’s face it, it was. Here’s the total picture showing how the actively managed fund universe compared with the broad market: In 2009, only 41.67 percent of active managers failed to beat the bogie.

Is it fair to say there’s “no clear trend” in those numbers? Sure. Is the long-term story still one of active managers being almost the probabilistic equivalent of a coin toss?” Absolutely. But I do feel the need to call out S&P’s shenanigans here. Active management does have its good years, and this was, simply, one of the best. The most stunning examples aren’t even in the headlines, though. They’re buried in the numbers. A few more high spots: Let’s look at the one-, three- and five-year asset-weighted returns of active managers vs. the S&P 500.

This is the marquee fight, for sure, and I’m sad to say, it’s one that active managers are now winning. The numbers were similar if you just look on an equal-weighted basis, but asset-weighted by definition captured the experience of more investors.

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