MFS CEO: The importance of dispersion and cyclicality for active investing

The dispersion of stock prices and the cyclicality of markets have generally been essential ingredients for the performance of traditional active managers.

Market conditions have favoured passive approaches over the past five years, a trend that we believe is a cyclical rather than secular phenomenon. What are the key events to look out for in 2018? While a bear market can help produce more investment opportunities for active strategies, it is not a downturn but rather a full market cycle that has allowed active managers to succeed. A major headwind for many active managers has been price dispersion, which has been accompanied by low market volatility. In recent years, the market has not generally differentiated between high-qualit...