2018 – Active Management: being at the right place at the right time
French coach Didier Deschamps had to be very selective with his players and implement the right strategy to win the World Cup 2018.Active management is like soccer, you have to be a the right place at the right time. Active management is the right strategy for the second year in a row where investors had to be very selective.
While most markets are down for the year as seen here below:
|MSCI Emerging Markets||5.90%|
|DJ Stoxx 50 Europe||0.90%|
|Bloomberg Barclays Global Aggregate Total Return||1.60%|
most stock pickers and hedge funds are up by having a bias towards investing in the US (Dow Jones is up +2.38% YTD) and more importantly by being in the right sectors: Information Technology is up over 10% and Energy, Consumer Discretionary and Healthcare are all up above 6%.
While the MSCI World index USD is up +2.13% for the year, the spread between the best and the worst sector is more than 17.0% (as seen above).Despite the remaining political risks from Europe and the Trump administration, financials markets have now been rational for more than two years. Earnings and corporate activity are driving the stock markets and NOT macro fears such as EUR breakout, China hard landing and Oil collapse for instance.
We expect this environment to continue where active management should outperform passive index investing.