Active Managers Flex Muscles
Last year’s market environment gave active managers a chance to flex their skills and many of them delivered, says Verus Investments. The percentage of active managers generating excess returns over the market increased from 2021 to 2022 across a number of different investment strategies. For example, among U.S. large-cap growth funds, 45 per cent outperformed the market last year, up from 21 per cent in 2021. It says it is likely that uncertainty in markets resulted in an attractive environment for skilled active managers to outperform benchmarks. However, the level of outperformance varies greatly by strategy. Value managers, in general, had an easier time beating benchmarks than their growth peers last year. Core and value managers also demonstrated greater outperformance in the U.S. small-cap stocks last year, with both generating a greater than one per cent excess return, while small-cap growth managers lagged the market by 1.3 per cent.