The Shift Back to Active

  • Colin Berthoud, Co-Founder at TIM Group

  • 01.02.2017 09:00 am
  • Shift Back

Active Investment Management is under pressure: from fees to fund managers being wrong footed by the Brexit vote, the US election and OPEC production decline, the sector has been losing out to alternative investment strategies. Many commentators feel, or perhaps hope that this is a cyclical problem, citing recent declines in global trade and the effect of quantitative easing, which tend to herd price moves together.  The theory goes that this makes traditional stock picking more difficult, but that with the end of quantitative easing and eventually global trade, markets will return to normal. 

TIM Group believes the problem is more structural.  While analysis of fundamental data could provide good insights into a stock historically, traditional stock picking techniques are now relatively unimportant given the sea of information available. In order to add value, active managers must learn to marshal the new types of data, adopting techniques used by the growing number of quantitative managers.  Much of the industry recognises this.  TIM Group commissioned recent research which found that, amongst a cross section of investment managers with a collective $5.6 trillion AUM, 94% of respondents expect quantitative strategies to become more popular in the coming years. 

Put another way, active managers increasingly recognise they must consult a range of sources, exploiting technology to do so, if they are to beat the market. 

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