The jury is still out on whether active managers’ year-to-date resurgence represents a true recovery for the sector after a difficult 2016, fund researchers have said.
The proportion of active fund managers outperforming their indices has rebounded this year, according to FE data compiled by Investment Adviser.
In the UK alone, almost three-quarters of active funds beat the FTSE All-Share index in the first six months of 2017, compared with less than a fifth in 2016.
Similar gulfs have emerged in the IA Global, Europe ex UK and Global Emerging Market sectors.
While the figures encompass a relatively short period, fund buyers have said a continuation of one market trend witnessed this year – growth stocks’ renewed outperformance versus value shares – could ensure more active managers continue to deliver excess returns.
Charles Younes, research manager at FE, said: “We’re back to what worked well before the value rally. Very few managers completely restructured their portfolios, so they’re in a better position than they were six months ago.”
But with more active managers now outperforming than in previous periods when value shares struggled, buyers have also pointed to tighter monetary policy in the US as an additional factor.
Brooks Macdonald managed portfolio service head Jonathan Webster-Smith said: “You had government and central bank support and that is waning. You don’t have that backdrop [anymore], so the correlation between the asset classes has dropped.”
Few see the turnaround as definitive evidence of a renaissance just yet, particularly as active funds have endured a difficult July versus benchmarks.
Psigma chief investment officer Tom Becket said “there are signs that a corner has been turned”, but added that it was too soon to “conclusively” call a recovery.
Mr Younes said European and global manager outperformance rates of 68 and 74 per cent, respectively, meant caution was required for the remainder of the year.
“It would be surprising if we didn’t have a mean reversion trend. Such a level of outperformance in the second half with no big events will be very surprising,” he said.
For global funds, active managers’ widespread move into Europe this year may have helped improve their lot.
The FTSE Europe ex UK index jumped 12 per cent in the first six months of 2017 in sterling terms, compared with a 6 per cent rise for the FTSE World and a 4 per cent increase for the FTSE USA.
The US continues to be a difficult hunting ground for managers, however.
The proportion of funds in the IA North America sector that outperformed the S&P 500 has fallen in 2017 compared with full-year figures for 2016.
The only other major region in which active performance has worsened is Japan.
