Will 2017 Favour More Active Fund Managers?

Lower correlations between individual stocks has created an opportunity for active fund managers to outperform passive strategies

Danielle Levy 10 February, 2017 | 12:00PM
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Active managers have, on the whole, struggled to outperform their benchmarks over the past seven years, marking a trend that has supported the growth of passive funds.

Commentators attribute this underperformance to rising correlations between markets, which has caused asset classes to rise and fall together at certain points. In addition, there have been higher correlations between stocks – making it harder for stock pickers to generate returns by picking the winners.

“When everything moves together when markets are risk-on or risk-off - as we have seen over the last few years - it is very hard for stock pickers,” said Peter Sleep, senior investment manager at Seven Investment Management.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BlackRock Asia A Acc GBP217.20 GBP0.00Rating

About Author

Danielle Levy  is a freelance journalist specialising in investment writing for Morningstar.co.uk

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