Active managers' outperformance set to continue as stock correlations decline

AB Bernstein report

Tom Eckett
clock • 4 min read

Analysts at AB Bernstein expect active managers to continue and even improve on their recent strong performance as correlations between stocks fall and value spreads widen, making it easier to discriminate between the winning and losing stocks.

In the report The Great Correlation Collapse Continues - Where to Look for Alpha?, seen by Investment Week, analysts said stock correlations had reached their lowest point in the past decade while factor correlations were trending towards pre-crisis levels.  Stock correlations are the "crucial ingredient for active performance", they added, pointing to the cyclical nature of fund manager performance.  Moody's: Passives will overtake active funds in US by 2024 Tough year for actives Active managers had a tough 2016. For example, the FTSE All-Share returned 16.8% for the calendar y...

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