E X H I B I T 3 Summary of Annual Returns
Source: eVestment, all U.S. equity universe.
three-year return places the founder-CEOs in the top two percentile. During the one-year period (2015) the founder-CEO index ranks among the top five percentile of all U.S. equity funds. The calendar year returns (Exhibit 3) provide an overview of the annualized returns of the founder-CEO index relative to an eVestment all U.S. equity universe of 3,799 + funds as well as the U.S. large-cap fund bench- mark. 41 The 30-constituent founder-CEO index gen- erally performs in the top one-half of all funds in the database (seven out of nine years shown), although it fell below average in one year and well below average in another. The recessionary year of 2008, in partic- ular, represents a difficult period for the founder-CEO index. The index lost 45.27% (90th percentile among all U.S. equity funds) in 2008 and fell at least 5% to 10% below average for most U.S. equity funds and − 2.17% below the U.S. large-cap VUG benchmark ( − 45.27 versus − 43.1%). In 2012, the founder-CEO index gener- ates 13.23% (77th percentile among 3,991 all U.S. Equity funds in eVestment database), which lies approximately 1%–2% below average in performance for all U.S. equity
funds but 4.36% below the U.S. large-cap benchmark (VUG) of 17.59%. In contrast, the founder-CEO index provides relative strength against most other U.S. equity funds in years such as 2013, when it earns 48.77% (top five percentile among 3,925 U.S. equity funds); 2009, when it generates 48.74% (top 10 percentile among 4,331 all U.S. equity funds); 2010, when it produces 28.89% (top 15 percentile); and 2015, when it returns 7.42% (top five percentile among 3,799 all U.S. equity funds). 42 During the strong years for the founder-CEO index— 2015, 2013, 2011, 2010, and 2009—the index outper- forms the U.S. large-cap growth benchmark (VUG) by 4.16%, (7.42% − 3.26%), 15.45% (48.77% − 33.32%), 5.9% (7.39% − 1.49%), 7.94% (28.89% − 20.95%), and 11.89% (48.74% − 36.85%), respectively. The annual returns shown in Exhibit 3 demon- strate the outperformance of the founder-CEO index for most years of our study, but striking underperfor- mance during the critical recessionary year of 2008. Overall, the strong performance of the founder-CEO index, shown in Exhibit 2 on an absolute and relative basis, remains consistent with the year-by-year returns we observe in Exhibit 3.
W INTER 2017
T HE J OURNAL OF I NDEX I NVESTING
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