Low volatility and dispersion make it harder for active managers to add value. In other words, high volatility and high dispersion environments are expected to favor active managers to demonstrate their skill. In this aspect, March 2020 offered an opportunity to active managers[1] across the world, including in Latin American equity markets. High dispersion and…
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In 1973, Princeton professor Burton Malkiel wrote the book, A Random Walk Down Wall Street, laying out a case against the mutual funds of the time as persistently underperforming market indices. Malkiel recommended[i] that the New York Stock Exchange create a fund that simply bought and held stock in the companies comprising the indices. Somewhat…
European equity markets, as measured by the S&P Europe 350, went up 3.44% in 2016, yet the average performance of active managers invested in Europe was negative, whether measured on an asset-weighted or equal-weighted basis. Over the one-year period, more than 80% of active managers invested in European equities underperformed their respective S&P DJI benchmark….
This morning’s Wall Street Journal offered a partial explanation for the failure of most active managers to outperform their cap-weighted index benchmarks in 2014. The proffered explanation is that “the rally in U.S. stocks was generally led by giant-company shares, such as Apple Inc., which rose 40%.” Since most active funds are underweight most mega-cap…
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