Why Active Managers are well placed to take advantage of social, economic, and political regime change in 2017
The increases in volatility and lower stock correlations likely to result from political and economic upheaval could provide precisely the environment in which skilled stock pickers can thrive.
We begin 2017 facing a new paradigm and an ever more unpredictable world. Markets are dislocating as the impact of a changed political and economic direction in major regions begins to be felt and the benign monetary policy of the past eight years is wound back. In this environment, the potential for active managers to outperform is heightened and the reward for identifying those managers most likely to do so should be greatly enhanced.
In June 2015, Chris Wagstaff, Senior Visiting Fellow at Cass Business School, published the paper, 'Not all active managers are created equal - what to look for and why', illustrating the merits of the best active managers. Now, the changing external environment more than ever brings this into sharp focus, with talented active managers well placed to take advantage of the increases in volatility and lower stock correlations likely to ensue. Indeed, this is exactly the environment that plays to the strengths of skilled stock pickers.
By applying the requisite due diligence, investors increase their chances of finding exceptional active managers who can achieve desired investment outcomes. This is especially true against the backdrop of social, economic and political dislocation we face as 2017 unfolds.
The report, produced for Columbia Threadneedle Investments, is available for download at the link below.