Active Equity Manager Performance Benefits as Breadth Widens

A market environment with a wider breadth of winners and losers provides greater opportunity for skilled active managers to distinguish themselves. Given the more balanced earnings contribution across sectors relative to 2020–21 and the widely dispersed equity valuations, we expect the breadth of winners and losers will be wider in 2022.

December 2021

Catch My Drift? Active Managers’ Style Tends to Change Over Time

The style bias of actively managed growth and value equity portfolios is not typically static. In this paper, we highlight how the strength of active managers’ style signatures have moved between value and growth and propose a simple fundamental rationale for why this happens.

September 2021

Can Value Stocks Continue to Outperform the Broad Market?

Yes, we believe value stocks can resume their leadership relative to the broad market over the next six to 12 months, provided we are correct in our assessment that the economic impact of COVID-19 Delta variant will be limited in major developed markets and China.

August 2021

Portfolio Protection: Challenges with Equity Put Options

We advise extreme caution in using derivatives to protect portfolios from sharp equity drawdowns. We recommend that investors look to asset allocation to defend against equity risk before buying puts. For those investors who must pursue a tail-risk hedge, we provide a list of potential pitfalls and solutions, in the form of a case study.

May 2021

Will the Global Equity Rotation from Growth Stocks to Cyclicals Persist?

Yes, we expect it will. We anticipate global inflation expectations will remain stable or increase modestly amid rising economic growth, which would allow the equity market rotation into cyclicals to continue.

May 2021

Does 2021 Look Like a Good Year for Active Equity Managers?

Active equity managers tend to perform better when the average stock within a market capitalization–weighted index outperforms the index itself.

April 2021

Should Investors Be Concerned About the Degree of Concentration in US Equity Markets?

Yes, because rising concentration reflects rising valuations for the largest stocks, which are likely to serve as a headwind to index returns. Further, the growing market share of these companies increases the potential for rising regulatory oversight.

February 2021

Will Virus-Linked Risks Overwhelm Small-Cap Equities?

No, we’re optimistic about this diverse collection of companies, and we think investors without dedicated allocations should establish toe-hold positions in developed markets (DM) small-cap equities funded from DM mid- to large-cap peers.

July 2020